4. Is monopolistic competition efficient?Suppose that a company operates in the monopolistically competitive market for rugby kits. The following graph shows the demand curve, marginalrevenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve for the firm.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.(?)PRICE (Dollars per kit)1009080706050403020100MC01020ATCMRDemand30 40 50 60 70QUANTITY (Thousands of kits)8090100+Mon Comp OutcomeMin Unit Cost Because this market is monopolistically competitive, you can tell that it is in long-run equilibrium by the fact thatfirm. Further, the quantity the firm produces in long-run equilibrium isthe efficient scale.True or False: This indicates that there is a markup on marginal cost in the market for kits.TruetheFalseat the optimal quantity for eachMonopolistically competitive markets may be socially inefficient due to the presence of too many or too few firms. The presence ofexternality implies that there is too little entry of new firms in the market.

A monopolistic competitive firm produces at MR = MC. A firm attains minimum unit cost at the…

Suppose that a company operates in the monopolistically competitive market for rugby kits. The following graph shows the demand curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve for the firm. 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.

Suppose that a company operates in the monopolistically competitive market for rugby kits. The following graph shows the demand curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve for the firm. 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.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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