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Suppose that a firm engages in Monopolistic Competition. Suppose that these firms all start in Long-Run Equilibrium. 7. Draw figure with the firm's (i) MC, (ii) LRAC, (iii) MR, and (iv) Demand, that shows this firm's Long-Run Equilibrium. Show what price they produce at. Show what quantity they produce. What profits do they make? [2 points] Suppose that there is a decrease for the Demand for the product in this market. 8. What would happen to the market price, quantity, and profits for an individual firm in the Short-Run? Explain your answer using a figure similar to the one you drew in Q7. [3 points] 9. What would happen to the market price, quantity, profits, and the number of firms in this market in the Long-Run? Explain your answer using a figure similar to the one you drew in Q7. [3 points]

Suppose that a firm engages in Monopolistic Competition. Suppose that these firms all start in Long-Run Equilibrium. 7. Draw figure with the firm's (i) MC, (ii) LRAC, (iii) MR, and (iv) Demand, that shows this firm's Long-Run Equilibrium. Show what price they produce at. Show what quantity they produce. What profits do they make? [2 points] Suppose that there is a decrease for the Demand for the product in this market. 8. What would happen to the market price, quantity, and profits for an individual firm in the Short-Run? Explain your answer using a figure similar to the one you drew in Q7. [3 points] 9. What would happen to the market price, quantity, profits, and the number of firms in this market in the Long-Run? Explain your answer using a figure similar to the one you drew in Q7. [3 points]

Principles of Microeconomics
Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter16: Monopolistic Competition
Section: Chapter Questions
Problem 5PA
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Suppose that a firm engages in Monopolistic Competition. Suppose that these firms all start in Long-Run Equilibrium. 7. Draw figure with the firm's (i) MC, (ii) LRAC, (iii) MR, and (iv) Demand, that shows this firm's Long-Run Equilibrium. Show what price they produce at. Show what quantity they produce. What profits do they make? [2 points] Suppose that there is a decrease for the Demand for the product in this market. 8. What would happen to the market price, quantity, and profits for an individual firm in the Short-Run? Explain your answer using a figure similar to the one you drew in Q7. [3 points] 9. What would happen to the market price, quantity, profits, and the number of firms in this market in the Long-Run? Explain your answer using a figure similar to the one you drew in Q7. [3 points]
Transcribed Image Text:Suppose that a firm engages in Monopolistic Competition. Suppose that these firms all start in Long-Run Equilibrium. 7. Draw figure with the firm's (i) MC, (ii) LRAC, (iii) MR, and (iv) Demand, that shows this firm's Long-Run Equilibrium. Show what price they produce at. Show what quantity they produce. What profits do they make? [2 points] Suppose that there is a decrease for the Demand for the product in this market. 8. What would happen to the market price, quantity, and profits for an individual firm in the Short-Run? Explain your answer using a figure similar to the one you drew in Q7. [3 points] 9. What would happen to the market price, quantity, profits, and the number of firms in this market in the Long-Run? Explain your answer using a figure similar to the one you drew in Q7. [3 points]
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