Suppose the market for cereal is monopolistically competitive and in long-run equilibrium. The demand (and marginal revenue) for a firm in this industry is illustrated in the graph to the right, along with that firm's average total cost and marginal cost of producing its brand of cereal. Compared to perfectly competitive markets in the long-run, monopolistically competitive markets, such as that for cereal, allocatively efficient because they produce excess capacity. For example, according of thousand boxes. are are not ionopolistically competitive firm has excess capacity esponse using an integer.) 150 135- 120- 105- 90- 75- 60 45- 30- 15- Price and cost (dollars per box) MC ATC MR 10 20 20 30 40 50 60 70 80 90 100 Quantity of cereal (per week in 1000s) Q Q
Suppose the market for cereal is monopolistically competitive and in long-run equilibrium. The demand (and marginal revenue) for a firm in this industry is illustrated in the graph to the right, along with that firm's average total cost and marginal cost of producing its brand of cereal. Compared to perfectly competitive markets in the long-run, monopolistically competitive markets, such as that for cereal, allocatively efficient because they produce excess capacity. For example, according of thousand boxes. are are not ionopolistically competitive firm has excess capacity esponse using an integer.) 150 135- 120- 105- 90- 75- 60 45- 30- 15- Price and cost (dollars per box) MC ATC MR 10 20 20 30 40 50 60 70 80 90 100 Quantity of cereal (per week in 1000s) Q Q
Chapter1: Making Economics Decisions
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Transcribed Image Text:Suppose the market for cereal is monopolistically competitive and in long-run equilibrium. The
demand (and marginal revenue) for a firm in this industry is illustrated in the graph to the right,
along with that firm's average total cost and marginal cost of producing its brand of cereal.
Compared to perfectly competitive markets in the long-run, monopolistically competitive markets,
such as that for cereal,
allocatively efficient because they produce
excess
capacity.
For example, according
of thousand boxes.
are
are not
onopolistically competitive firm has excess capacity
esponse using an integer.)
150
135-
120-
105-
90-
75-
60-
45-
30-
15-
Price and cost (dollars per box)
MC
ATC
MR
D
10 20 30 40 50 60 70 80 90 100
Quantity of cereal (per week in 1000s)
Q
Q
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