PRICE (Dollars per jacket) 3. Is monopolistic competition efficient? Suppose that a firm produces wool jackets in a monopolistically competitive market. The following graph shows its demand curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve. Place a black point (plus symbol) on the graph to indicate the long-run monopolistically competitive equilibrium price and quantity for this firm. Next, place a grey point (star symbol) to indicate the minimum average total cost the firm faces and the quantity associated with that cost. 100 g 90 80 70 60 50 ATC 40 30 20 10 MC MR Demand 0 0 10 20 30 40 50 60 70 60 90 100 QUANTITY (Thousands of jackets) Mon Comp Outcome Min Unit Cost at the the efficient scale. Because this market is a monopolistically competitive market, you can tell that it is in long-run equilibrium by the fact that optimal quantity. Furthermore, the quantity the firm produces in long-run equilibrium is
PRICE (Dollars per jacket) 3. Is monopolistic competition efficient? Suppose that a firm produces wool jackets in a monopolistically competitive market. The following graph shows its demand curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve. Place a black point (plus symbol) on the graph to indicate the long-run monopolistically competitive equilibrium price and quantity for this firm. Next, place a grey point (star symbol) to indicate the minimum average total cost the firm faces and the quantity associated with that cost. 100 g 90 80 70 60 50 ATC 40 30 20 10 MC MR Demand 0 0 10 20 30 40 50 60 70 60 90 100 QUANTITY (Thousands of jackets) Mon Comp Outcome Min Unit Cost at the the efficient scale. Because this market is a monopolistically competitive market, you can tell that it is in long-run equilibrium by the fact that optimal quantity. Furthermore, the quantity the firm produces in long-run equilibrium is
Chapter1: Making Economics Decisions
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Transcribed Image Text:PRICE (Dollars per jacket)
3. Is monopolistic competition efficient?
Suppose that a firm produces wool jackets in a monopolistically competitive market. The following graph shows its demand curve, marginal revenue
(MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve.
Place a black point (plus symbol) on the graph to indicate the long-run monopolistically competitive equilibrium price and quantity for this firm. Next,
place a grey point (star symbol) to indicate the minimum average total cost the firm faces and the quantity associated with that cost.
100
g
90
80
70
60
50
ATC
40
30
20
10
MC
MR
Demand
0
0
10
20
30
40
50 60 70 60
90
100
QUANTITY (Thousands of jackets)
Mon Comp Outcome
Min Unit Cost
at the
the efficient scale.
Because this market is a monopolistically competitive market, you can tell that it is in long-run equilibrium by the fact that
optimal quantity. Furthermore, the quantity the firm produces in long-run equilibrium is
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