Suppose that a firm produces polo shirts 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. ? PRICE (Dollars per shirt) 100 90 80 70 60 50 40 30 20 10 MC 0 -- 0 10 -- True 1 I OFalse MR ATC Demand 20 30 40 50 60 70 80 QUANTITY (Thousands of shirts) 90 100 Mon Comp Outcome Because this market is a monopolistically competitive market, you can tell that it is in long-run equilibrium by the fact that P = ATC optimal quantity. Furthermore, a monopolistically competitive firm's average total cost in long-run equilibrium is equal to average total cost. Min Unit Cost True or False: This indicates that there is excess capacity in the market for shirts. at the the minimum

Suppose that a firm produces polo shirts 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. ? PRICE (Dollars per shirt) 100 90 80 70 60 50 40 30 20 10 MC 0 -- 0 10 -- True 1 I OFalse MR ATC Demand 20 30 40 50 60 70 80 QUANTITY (Thousands of shirts) 90 100 Mon Comp Outcome Because this market is a monopolistically competitive market, you can tell that it is in long-run equilibrium by the fact that P = ATC optimal quantity. Furthermore, a monopolistically competitive firm's average total cost in long-run equilibrium is equal to average total cost. Min Unit Cost True or False: This indicates that there is excess capacity in the market for shirts. at the the minimum

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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