The linear demand curve for the monopolistic competition model implies that if a firm's price isthe industry average.the industry average, its quantity sold will beabove; abovethe same as; aboveabove; belowbelow; below If a firm (using a technology with increasing returns to scale as described in class) charges aprice equal tothen profit will bemarginal cost; positivemarginal cost; maximizedmarginal cost; negativeO marginal revenue; maximized

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Which of these businesses are in monopolistic competition? Two clothing shops, one selling women clothing and the other selling kids clothing Two agricultural producers, each selling a variety of kinds of citrus fruit Two pet stores, one of which sells dog products and the other of which sells bird products Two phone providers, each offering benefits to customers who switch to its service
A monopolistic competitor engages in advertising to A) provide information about its good or product B) differentiate its product from those of its rivals C) increase the demand for its good or service D) all of the above
In the long run, monopolistically competitive firms produce a level of output such that:
The diagram below illustrates a firm under monopolistic competition: (a) Label the curves Curve I, Curve II, Curve III, Curve IV. (b) Graphically identify profit maximizing output and price (c) Explain how the amount of profit is defined at the maximum-profit output. II II IV Q
In the model of monopolistic competition, an increase in industry output will cause individual firms' demand curves to become ________, which will ________ demand for higher-priced goods and ________ demand for lower-priced goods.
The demand curve of a monopolistically competitive form is Select one: Perfectly inelastic Perfectly elastic Highly, but not perfectly elastic Relatively, but not perfectly inelastic None of the answers are correct
What does it mean in a monopolistically competitive market, when the rule for maximizing profit is to set MR = MC? Group of answer choices Price is equal to marginal revenue. Price is equal to marginal cost. Price is lower than marginal revenue. Price is higher than marginal revenue.
In the model of monopolistic competition, industry, then we should expect industry. fixed costs; more marginal costs; less marginal costs; more fixed costs; less if an industry has large relative to another firms to operate in a long-run equilibrium of that
If this monopolistic firm's marginal cost is constant at $30, its profit maximizing output is: (Hint: Demand is linear (P-a-bQ) implying that the MR curve's slope is twice the demand curve slope; find the demand curve and then the MR curve.) Price $70 $50 $30 $10 10 20 30 40 50 units. 40 units. 20 units. 30 units. Demand 50 60 70 Quantity
The practice of product differentiation in the monopolistic competition market enables firms to compete in three areas. What are these areas?
Consider the model of monopolistic competition with homogeneous firms Monopolistic Competition I. developed in class. Firms have a constant marginal cost c, pay a fixed cost F, and sell differentiated varieties. The overall size of the market is S. A parameter b governs the consumers' sensitivity to price deviations from industry average, in terms of lost/gained market share. Firms enjoy market power and charge a markup over marginal cost. There is free entry. Use a diagram to study the consequences of the following shocks for the number of varieties sold to consumers, the price charged, the markup, and welfare. 1. A decrease in the fixed cost F. 2. A decrease in the marginal cost c. 3. An increase in the size of the market, S.
Suppose sellers in a monopolistically competitive market are experiencing negative economic profit, which of the following scenarios would best reflect the change facing existing sellers as the market adjusts to the long run equilibrium?

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The linear demand curve for the monopolistic competition model implies that a firm's price is the industry average. the industry average, its quantity sold will be above; above the same as; above above; below below; below