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Which of the following statements are true about BOTH monopolistic competition AND monopolies? Check all that apply a) price is above marginal cost b) firms can earn positive profit in the long run c) firms earn zero profit in the long run d) firms are not price takers

Which of the following statements are true about BOTH monopolistic competition AND monopolies? Check all that apply a) price is above marginal cost b) firms can earn positive profit in the long run c) firms earn zero profit in the long run d) firms are not price takers

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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3rd question

Which of the following statements are true about BOTH monopolistic competition AND monopolies? Check all that apply

a) price is above marginal cost

b) firms can earn positive profit in the long run

c) firms earn zero profit in the long run

d) firms are not price takers

M 00 CO LL 50 50 PRICE (Dollars per bike) 3. How short-run profit or losses induce entry or exit Fantastique Bikes is a company that manufactures bikes in a monopolistically competitive market. The following graph shows Fantastique's demand curve, marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC). Place the black point (plus symbol) on the graph to indicate the short-run profit-maximizing price and quantity for this monopolistically competitive company. Then, use the green rectangle (triangle symbols) to shade the area representing the company's profit or loss. 450 Monopolistically Competitive Outcome 350 Profit or Loss ATC 250 150 MC MR Demand 0. 150 250 000 QUANTITY (Bikes) 450 Given the profit-maximizing choice of output and price, the shop is making profit, which means there are shons in the industr relative to the Jong-run equilihrium MacBook Pro *SAFAT ACID 四 & #3 24 3. 4. 5. M R. J S K. B.
Transcribed Image Text:M 00 CO LL 50 50 PRICE (Dollars per bike) 3. How short-run profit or losses induce entry or exit Fantastique Bikes is a company that manufactures bikes in a monopolistically competitive market. The following graph shows Fantastique's demand curve, marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC). Place the black point (plus symbol) on the graph to indicate the short-run profit-maximizing price and quantity for this monopolistically competitive company. Then, use the green rectangle (triangle symbols) to shade the area representing the company's profit or loss. 450 Monopolistically Competitive Outcome 350 Profit or Loss ATC 250 150 MC MR Demand 0. 150 250 000 QUANTITY (Bikes) 450 Given the profit-maximizing choice of output and price, the shop is making profit, which means there are shons in the industr relative to the Jong-run equilihrium MacBook Pro *SAFAT ACID 四 & #3 24 3. 4. 5. M R. J S K. B.
PRICE (Dollars per bike) < CO Given the profit-maximizing choice of output and price, the shop is making profit, which means there are shops in the industry relative to the long-run equilibrium. Now consider the long run in which bike manufacturers are free to enter and exit the market. Show the possible effect of this free entry and exit by shifting the demand curve for a typical individual producer of bikes on the following graph. Demand Demand QUANTITY (Bikes) Which of the following statements are true about both monopolistic competition and monopolies? Check all that apply. MacBook Pro ATAT ACIDEAL 田 23 24 5. 8. M B. W N 8 A
Transcribed Image Text:PRICE (Dollars per bike) < CO Given the profit-maximizing choice of output and price, the shop is making profit, which means there are shops in the industry relative to the long-run equilibrium. Now consider the long run in which bike manufacturers are free to enter and exit the market. Show the possible effect of this free entry and exit by shifting the demand curve for a typical individual producer of bikes on the following graph. Demand Demand QUANTITY (Bikes) Which of the following statements are true about both monopolistic competition and monopolies? Check all that apply. MacBook Pro ATAT ACIDEAL 田 23 24 5. 8. M B. W N 8 A
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