How short-run profit or losses induce entry or exitFantastique Bikes is a company that manufactures bikesin a monopolistically competitive market. The followinggraph shows Fantastique's demand curve, marginalrevenue curve (MR), marginal cost curve (MC), andaverage total cost curve (ATC).2. How short-run profit or losses induce entry or exitFantastique Bikes is a company that manufactures bikes in a monopolistically competitive market. The following graph shows Fantastique's demandcurve, marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC).Place the black point (plus symbol) on the graph to indicate the short-run profit-maximizing price and quantity for this monopolistically competitivecompany. Then, use the green rectangle (triangle symbols) to shade the area representing the company's profit or loss500400350300ATC250*200150100MOMR4505030PRICE (Dollars per l0DemandA0 50 100 150 200 250 300 350 400 450 500QUANTITY (Bikes)Given the profit-maximizing choice of output and price, the shop is making+Monopolistically Competitive Outcome✰✰Proft or Lossshops in the industry relative to the long-run equilibrium.QUANTITY (Bikes)Now consider the long run in which bike manufacturers are free to enter and exit the market.Show the possible effect of this free entry and exit by shifting the demand curve for a typical individual producer of bikes on the following graph.Demandprofit, which means there areDemand Which of the following statements are true about both monopolistic competition and monopolies? Check all that apply.Firms are not price takers.Firms can earn positive profit in the long run.Firms earn zero profit in the long run.Price is above marginal cost.

Marginal revenue is a central concept in microeconomics that describes the additional total revenue…

Place the black point (plus symbol) on the graph to indicate the short-run profit-maximizing price and quantity for this monopolistically competitive company. Then, use the green rectangle (triangle symbols) to shade the area representing the company's profit or loss

Place the black point (plus symbol) on the graph to indicate the short-run profit-maximizing price and quantity for this monopolistically competitive company. Then, use the green rectangle (triangle symbols) to shade the area representing the company's profit or loss

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

How short-run profit or losses induce entry or exit
Fantastique Bikes is a company that manufactures bikes
in a monopolistically competitive market. The following
graph shows Fantastique's demand curve, marginal
revenue curve (MR), marginal cost curve (MC), and
average total cost curve (ATC).
2. How short-run profit or losses induce entry or exit
Fantastique Bikes is a company that manufactures bikes in a monopolistically competitive market. The following graph shows Fantastique's demand
curve, marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC).
Place the black point (plus symbol) on the graph to indicate the short-run profit-maximizing price and quantity for this monopolistically competitive
company. Then, use the green rectangle (triangle symbols) to shade the area representing the company's profit or loss
500
400
350
300
ATC
250
*
200
150
100
MO
MR
450
50
30
PRICE (Dollars per l
0
Demand
A
0 50 100 150 200 250 300 350 400 450 500
QUANTITY (Bikes)
Given the profit-maximizing choice of output and price, the shop is making
+
Monopolistically Competitive Outcome
✰✰
Proft or Loss
shops in the industry relative to the long-run equilibrium.
QUANTITY (Bikes)
Now consider the long run in which bike manufacturers are free to enter and exit the market.
Show the possible effect of this free entry and exit by shifting the demand curve for a typical individual producer of bikes on the following graph.
Demand
profit, which means there are
Demand

Which of the following statements are true about both monopolistic competition and monopolies? Check all that apply.
Firms are not price takers.
Firms can earn positive profit in the long run.
Firms earn zero profit in the long run.
Price is above marginal cost.

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Place the black point (plus symbol) on the graph to indicate the short-run profit-maximizing price and quantity for this monopolistically competitive company. Then, use the green rectangle (triangle symbols) to shade the area representing the company's profit or loss. Note: Dashed drop lines will automatically extend to both axes. Select and drag the rectangles from the palette to the graph. To resize, select one of the points on the rectangle and move to the desired position. PRICE (Dollars per bike) 500 450 400 350 PRICE (Dollars per bike) 300 250 200 150 100 50 0 0 MC + 50 100 AC MR 150 200 250 300 350 400 450 500 QUANTITY (Bikes) Demand Enjano Given the profit-maximizing choice of output and price, the shop is earning shops in the industry than in long-run equilibrium. + Monopolistically Competitive Outcome Now consider the long run in which bike manufacturers are free to enter and exit the market. QUANTITY (Bikes) Show the possible effect of free entry and exit by shifting the…
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