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Westchesser Gloves is a monopolistically competitive firm that sells leather gloves. a. In the graph below, highlight the area of profit or loss. Price per pair ($) 4 3 2 1 10 Average total cost Marginal cost Profit or loss 9 8 7 0 0 10 20 Marginal revenue 30 40 50 60 70 80 90 Pairs of gloves (in thousands) Demand 100 b. Calculate Westchesser's profit/loss at the profit maximizing price. Westchesser's profit/loss: $ c. What will happen to the number of firms in this industry in the long run? O Firms will exit the industry, causing the price at which each firm can sell its gloves to rise until economic profit equals zero. Firms will exit the industry, causing the price at which each firm can sell its gloves to fall until economic profit equals zero. Firms will enter the industry, causing the price at which each firm can sell its gloves to fall until economic profit equals zero. Firms will enter the industry, causing the price at which each firm can sell its gloves to rise until economic profit equals zero.

Westchesser Gloves is a monopolistically competitive firm that sells leather gloves. a. In the graph below, highlight the area of profit or loss. Price per pair ($) 4 3 2 1 10 Average total cost Marginal cost Profit or loss 9 8 7 0 0 10 20 Marginal revenue 30 40 50 60 70 80 90 Pairs of gloves (in thousands) Demand 100 b. Calculate Westchesser's profit/loss at the profit maximizing price. Westchesser's profit/loss: $ c. What will happen to the number of firms in this industry in the long run? O Firms will exit the industry, causing the price at which each firm can sell its gloves to rise until economic profit equals zero. Firms will exit the industry, causing the price at which each firm can sell its gloves to fall until economic profit equals zero. Firms will enter the industry, causing the price at which each firm can sell its gloves to fall until economic profit equals zero. Firms will enter the industry, causing the price at which each firm can sell its gloves to rise until economic profit equals zero.

Exploring Economics
Exploring Economics
8th Edition
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:Robert L. Sexton
Chapter14: Monopolistic Competition And Product Differentiation
Section: Chapter Questions
Problem 15P
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Westchesser Gloves is a monopolistically competitive firm that sells leather gloves. a. In the graph below, highlight the area of profit or loss. Price per pair ($) 4 3 2 1 10 Average total cost Marginal cost Profit or loss 9 8 7 0 0 10 20 Marginal revenue 30 40 50 60 70 80 90 Pairs of gloves (in thousands) Demand 100 b. Calculate Westchesser's profit/loss at the profit maximizing price. Westchesser's profit/loss: $ c. What will happen to the number of firms in this industry in the long run? O Firms will exit the industry, causing the price at which each firm can sell its gloves to rise until economic profit equals zero. Firms will exit the industry, causing the price at which each firm can sell its gloves to fall until economic profit equals zero. Firms will enter the industry, causing the price at which each firm can sell its gloves to fall until economic profit equals zero. Firms will enter the industry, causing the price at which each firm can sell its gloves to rise until economic profit equals zero.
Transcribed Image Text:Westchesser Gloves is a monopolistically competitive firm that sells leather gloves. a. In the graph below, highlight the area of profit or loss. Price per pair ($) 4 3 2 1 10 Average total cost Marginal cost Profit or loss 9 8 7 0 0 10 20 Marginal revenue 30 40 50 60 70 80 90 Pairs of gloves (in thousands) Demand 100 b. Calculate Westchesser's profit/loss at the profit maximizing price. Westchesser's profit/loss: $ c. What will happen to the number of firms in this industry in the long run? O Firms will exit the industry, causing the price at which each firm can sell its gloves to rise until economic profit equals zero. Firms will exit the industry, causing the price at which each firm can sell its gloves to fall until economic profit equals zero. Firms will enter the industry, causing the price at which each firm can sell its gloves to fall until economic profit equals zero. Firms will enter the industry, causing the price at which each firm can sell its gloves to rise until economic profit equals zero.
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