Which of the following statements concerning profit-maximizing firms in long-run equilibrium is true? In a purely competitive market, firms produce a level of output where price is greater than average total cost. In a purely competitive market, firms produce a level of output where price is greater than marginal cost. O In a monopolistically competitive market, firms produce a level of output at which price exceeds the minimum average total cost. In a monopolistically competitive market, firms produce a level of output that exceeds the output where average total cost is minimized.

Which of the following statements concerning profit-maximizing firms in long-run equilibrium is true? In a purely competitive market, firms produce a level of output where price is greater than average total cost. In a purely competitive market, firms produce a level of output where price is greater than marginal cost. O In a monopolistically competitive market, firms produce a level of output at which price exceeds the minimum average total cost. In a monopolistically competitive market, firms produce a level of output that exceeds the output where average total cost is minimized.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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If the firms in a monopolistically competitive market are earning economic profits in the short run, would you expect them to continue doing so in the long run? ● They will be unable to earn economic profits in the long run O They will always be able to earn economic profits in the long run. O They can continue to do so in the long run if new entries cannot completely erase the differentiation in their product. O Monopolisitc companies cannot earn economic profits in the long run unless government regulations help them achieve their goal of economic profits.
Suppose that a monopolistically competitive restaurant is currently serving 230 meals per day (the output where MR = MC). At that output level, ATC per meal is $10, and consumers are willing to pay $12 per meal. What is this firm's profit or loss? Will there be entry or exit? Will this restaurant's demand curve shift left or right? In long-run equilibrium, suppose that this restaurant charges $11 per meal for 180 meals and that the marginal cost of the 180th meal is $8. What is the firm's profit? (LO3)
In the model of monopolistic competition, compared to a firm with higher productivity, a firm with lower productivity will set a price, produce output, and earn profit. O higher; less; less O lower; more; more O lower; less; less O higher; less; more
The American market for shoes is a good example of monopolistic competition. In a situation where Adidas is earning a large economic profit in the short-run, Nikemay try to increase their advertising to capture some of that business, If Nike is successful in their campaign, what would happen to the demand curve for Adidas and the price at which they can sell?O a. The demand curve shifts up and to the right, and the price rises.O b. The demand curve shifts up and to the right, and the price falls.O c. The demand curve shifts down and to the left, and the price walls.O d. The demand curve shifts down and to the left, and the price rises.Oe. Nike cannot affect the demand for Adidas since this is a monopolistically competitive market.
7. Is monopolistic competition efficient? Suppose that a company operates in the monopolistically competitive market for rugby kits. The following graph shows the demand curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve for the firm. Place a black point (plus symbol) on the graph to indicate the long-run monopolistically competitive equilibrium price and quantity for this firm. Next, place a grey point (star symbol) to indicate the minimum average total cost the firm faces and the quantity associated with that cost. PRICE (Dolars per 3822ESRR 2 100 70 20 0 MO 6 19 20 ATC MR 30 AS 50 40 70 QUANTITY (Thousands of kits); Demand 8 100 Mon Comp Outcome Min Unit Cost C
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Which of the following is true of a monopolistically competitive firm in long run equilibrium? Price is greater than marginal cost and marginal revenue is equal to average total cost Price is greater than marginal revenue and marginal cost is equal to average total cost Price is greater than marginal revenue and marginal cost is greater than average total cost O Marginal revenue is equal to marginal cost and price is equal to average total cost Marginal revenue is greater than marginal cost and price is equal to average total cost
How would you best describe the economic profit (or loss) at the profit maximizing quantity q* in the long run for a monopolistically competitive firm? a) both a profit and a loss b) a profit c) a loss d) neither a profit nor a loss Is this monopolistically competitive firm efficient in production in the long run? Please state yes, no, it depends, and explain why in a few words or a formula. MC ATC 0 MR D
Can you explain it simply and clearly, especially the formula? Productive and Allocative Efficiency of Monopolistic Competition Price = Minimum Average Total Cost Most of the monopolistic competitive firms cannot achieve productive efficiency since they sell a higher or bigger price than the minimum average cost, and it can actually cost a loss of money in their minimum ATC. In monopolistic competitive firms they can also use their excess capacity but they would only produce a quantity equal to their minimum ATC. Yet they Might not be able to sell that in the amount without lowering their prices. So it's either reducing their profits or incurring losses. In addition, monopolistic firms doesn't meet the allocative efficiency. They cannot achieve it because allocative efficiency requires that Price = Marginal Cost. The monopolistic firm shows a downward sloping demand curve which means to sell more unit they must lower the price of all the units. The firm maximize profits when…
Demand for face masks at a small newsstand outside an airport is less elastic than demand inside the airport if _______. Select one: a. people prefer not to wear face masks. b. specific brands of face mask don't work as well. c. there are fewer substitutes at the stores inside the airport d. face masks are required to enter the airport.
Suppose the market for fast-food value meals is monopolistically competitive, with many restaurants selling their own brand of food. Assume the restaurants in the industry behave optimally by maximizing profit. The figure to the right represents the market for one monopolistically competitive firm's value meals. How will this figure change as the market moves toward long-run equilibrium? In the long run, O A. the average cost curve and the marginal cost curve will shift up because the firms are currently making profit. O B. the demand curve will shift to the left and become more elastic because the firms are currently making profit. nothing will change because monopolistically competitive markets have barriers to new firms entering. OC. O D. the demand curve will shift to the right and become more elastic because the firms are currently experiencing losses. O E. nothing will change because the firms in this market are breaking even. Price and cost (per value meal) 8.00- 7.60- 7.20 6.80…