The graph shows a firm in monopolistic competition. Use it to illustrate the difference between the price and quantity of the firm in long-run equilibrium and the efficient scale. First, move point A to the point that shows the quantity the firm will produce and the price it will charge Next, shift the average total cost curve to show the firm at long-run equilibrium Finally, place point B at the Efficient scale of production.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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The graph shows a firm in monopolistic competition. Use it to illustrate the difference between the price and quantity of the firm in long-run equilibrium and the efficient scale.

First, move point A to the point that shows the quantity the firm will produce and the price it will charge

Next, shift the average total cost curve to show the firm at long-run equilibrium

Finally, place point B at the Efficient scale of production. 

Price
20
19
18
17
16
15
14
13
12
11
10
9
8
7
6
543
2
1
0
A
Marginal revenue
B
Average total cost
Marginal cost
Demand
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Quantity
Transcribed Image Text:Price 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 543 2 1 0 A Marginal revenue B Average total cost Marginal cost Demand 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Quantity
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