The figure below shows the demand (D, MR) and cost (MC, ATC) curves for six oligopolies in the chewing gum industry. Assume that all 6 firms have the same identical cost curves. Demand and cost conditions for the Chewing Gum Industry $4 .40 .35 .31 8.30 .25 Dollars MC MR ATC D 0 12 14 16 Packs of chewing gum in thousands Suppose you're hired by the Department of Justice Anti-Trust Division to analyze the chewing gum industry. You conclude that if the industry were perfectly competitive, the short-run equilibrium output and price would be: a. 14,000 packs of chewing gum at a price of $0.30 per pack b. 16,000 packs of chewing gum at a price of $0.35 per pack indeterminate output levels from this information. c. d. 12,000 packs of chewing gum at a price of $0.40 per pack
The figure below shows the demand (D, MR) and cost (MC, ATC) curves for six oligopolies in the chewing gum industry. Assume that all 6 firms have the same identical cost curves. Demand and cost conditions for the Chewing Gum Industry $4 .40 .35 .31 8.30 .25 Dollars MC MR ATC D 0 12 14 16 Packs of chewing gum in thousands Suppose you're hired by the Department of Justice Anti-Trust Division to analyze the chewing gum industry. You conclude that if the industry were perfectly competitive, the short-run equilibrium output and price would be: a. 14,000 packs of chewing gum at a price of $0.30 per pack b. 16,000 packs of chewing gum at a price of $0.35 per pack indeterminate output levels from this information. c. d. 12,000 packs of chewing gum at a price of $0.40 per pack
Chapter9: Monopoly
Section: Chapter Questions
Problem 6SQP
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Question
![The figure below shows the demand (D, MR) and cost (MC, ATC) curves for six
oligopolies in the chewing gum industry. Assume that all 6 firms have the same identical
cost curves.
Demand and cost conditions for the Chewing Gum Industry
.40
.35
.31
8.30
.25
Dollars
MC
MR
ATC
D
0
12 14 16
Packs of chewing gum in thousands
Suppose you're hired by the Department of Justice Anti-Trust Division to analyze the
chewing gum industry. You conclude that if the industry were perfectly competitive, the
short-run equilibrium output and price would be:
a. 14,000 packs of chewing gum at a price of $0.30 per pack
b. 16,000 packs of chewing gum at a price of $0.35 per pack
C. indeterminate output levels from this information.
d. 12,000 packs of chewing gum at a price of $0.40 per pack](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7d8d092a-b738-4db5-9533-897dce711469%2F90a2d5cf-d0d0-413a-a74a-64e0fe3b5284%2Fdki6k9a_processed.png&w=3840&q=75)
Transcribed Image Text:The figure below shows the demand (D, MR) and cost (MC, ATC) curves for six
oligopolies in the chewing gum industry. Assume that all 6 firms have the same identical
cost curves.
Demand and cost conditions for the Chewing Gum Industry
.40
.35
.31
8.30
.25
Dollars
MC
MR
ATC
D
0
12 14 16
Packs of chewing gum in thousands
Suppose you're hired by the Department of Justice Anti-Trust Division to analyze the
chewing gum industry. You conclude that if the industry were perfectly competitive, the
short-run equilibrium output and price would be:
a. 14,000 packs of chewing gum at a price of $0.30 per pack
b. 16,000 packs of chewing gum at a price of $0.35 per pack
C. indeterminate output levels from this information.
d. 12,000 packs of chewing gum at a price of $0.40 per pack
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