please fast 29.Suppose Wave detergent is sold in a monopolistically competitive market. If the price of Wave detergent is currently $6, and the average cost of producing Wave is $4, in the long run we can expect: Question content area bottomPart 1 A.firms to enter the detergent market and sell products similar to Wave, shifting the demand curve for Wave to the left. B.the producers of Wave to go out of business. C.the producers of Wave to earn economic profits greater than zero. D.firms to enter the detergent market and sell product similar to Wave, shifting the demand curve for Wave to the right.ChatGPTA. firms to enter the detergent market and sell products similar to Wave, shifting the demand curve for Wave to the left.

Monopolistic competition is a a market structure where many firms sell differentiated products. Differentiated goods can arise due to several characteristics such as location from which the good is sold, perceptions of the good etc.When the price exceeds average total cost i.e. P>ATC there will be positive economic profits. Consequently it is expected that the more firms will enter the industry, firms will enter the industry, which will lower the price of the good. Thus the supply curve shifts to the right and the Wave detergent falls. Furthermore when more firms enter the market, the quantity demanded at a specific price for any specific firm will decline, causing the firm’s perceived demand curve to shift towards the left. Thus option a will be correctThe option b will be incorrect. Since Wave detergent is earning positive economic profits, other firms will be attracted to enter the market.The option c will be incorrect. As long as P > >ATC firms will continue to enter the Wave detergent market, and as a result the demand will continue shifting towards the inward.The option d will be incorrect. There will be a leftward shift the demand curve for Wave.The option a will be correct

Answered: Suppose Wave detergent is sold in a…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Question content area bottom

Part 1

firms to enter the detergent market and sell products similar to Wave, shifting the demand curve for Wave to the left.

the producers of Wave to go out of business.

the producers of Wave to earn economic profits greater than zero.

firms to enter the detergent market and sell product similar to Wave, shifting the demand curve for Wave to the right.

ChatGPT

A. firms to enter the detergent market and sell products similar to Wave, shifting the demand curve for Wave to the left.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions