Essentials of Economics (MindTap Course List)
7th Edition
ISBN: 9781285165950
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 14, Problem 2QR
To determine
The reason for the existence of natural
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QUESTION 1
You are currently on your summer break. You could either enjoy your summer in Hawaii with your friends or
open a sausage stall at the local market with your mom, knowing that the market for sausages is perfectly
competitive.
1. Going to Hawaii with your friends is your explicit cost when deciding to enter the market.
2. If you and your mom decide to open a sausage stall, your demand curve as a seller is perfectly elastic.
3. If you and your mom are expecting to gain a normal profit, you should definitely not enter the market.
Which of the above statements are true?
O Only 1 is true.
Only 2 is true.
Both 1 and 2 are true.
Both 2 and 3 are true.
All three are true.
Comparing a perfectly competitive market to a monopoly, which of the following is true?
a.
Price will be higher and quantity will be lower in the perfectly competitive market than in the monopoly.
b.
Price will be equal to marginal revenue in the perfectly competitive market but will be higher than marginal revenue in the monopoly.
c.
at that point on the market demand curve which intersects the marginal cost curve.
d.
Price will be higher than marginal cost in the perfectly competitive market but will be equal to marginal cost in the monopoly.
From the following graph, show the equilibriums under each scenario.
Market is in equilibrium at A under competitive market. (a) Show the equilibrium under monopoly. Call this point B (b) When the demand increased in the area due to immigration, show the new competitive equilibrium, call this point C. (c) Show the new monopolistic equilibrium with increased demand and call this point D.
Chapter 14 Solutions
Essentials of Economics (MindTap Course List)
Ch. 14.1 - Prob. 1QQCh. 14.2 - Prob. 2QQCh. 14.3 - Prob. 3QQCh. 14.4 - Prob. 4QQCh. 14.5 - Prob. 5QQCh. 14 - Prob. 1QRCh. 14 - Prob. 2QRCh. 14 - Prob. 3QRCh. 14 - Prob. 4QRCh. 14 - Prob. 5QR
Ch. 14 - Prob. 6QRCh. 14 - Prob. 7QRCh. 14 - Prob. 8QRCh. 14 - Prob. 1QCMCCh. 14 - Prob. 2QCMCCh. 14 - Prob. 3QCMCCh. 14 - Prob. 4QCMCCh. 14 - Prob. 5QCMCCh. 14 - Prob. 6QCMCCh. 14 - Prob. 1PACh. 14 - Prob. 2PACh. 14 - Prob. 3PACh. 14 - Prob. 4PACh. 14 - Prob. 5PACh. 14 - Prob. 6PACh. 14 - Prob. 7PACh. 14 - Prob. 8PACh. 14 - Prob. 9PACh. 14 - Prob. 10PACh. 14 - Prob. 11PA
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Similar questions
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- If the on-campus demand for soda is as follows: Price (per can) Quantity demanded (per day) 1.50 b. A monopolized market? tA $3.00 $2.75 $2.50 $2.25 30 40 50 60 and the marginal cost of supplying a soda is $2.00, what price will students end up paying in Instructions: Round your responses to two decimal places. a. A perfectly competitive market? $ 2.50 $2.00 $1.75 $1.50 $1.25 80 100 70 90arrow_forwardWhat form of competition best characterizes this market? What characteristics did you identify that led you to that conclusion?coffee shop marketarrow_forwardUse the figure below, which shows the situation facing Mike’s Bikes, to answer the questions below. The demand and costs of other mountain bike producers are similar to those of Mike’s Bikes. What quantity does the firm produce and what is its price? Calculate the firm’s economic profit or economic loss. What will happen to the number of firms producing mountain bikes in the long run? How will the price of a mountain bike and the number of bikes produced by Mike’s Bikes change in the long run? How will the quantity of mountain bikes produced by all firms change in the long run? Is there any way for Mike’s Bikes to avoid having excess capacity in the long run? Is the market for mountain bikes efficient or inefficient in the long run? Explain your answer.arrow_forward
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