Whether the monopolistically competitive firms produce economic profits because they are protected.

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 15, Problem 1P

(a)

To determine

Whether the monopolistically competitive firms produce economic profits because they are protected.

(a)

Expert Solution

Answer to Problem 1P

Disagree.

Explanation of Solution

There are many buyers and sellers in the market. The sellers sell differentiated products which means there is competition in the market. However, it is important to note that there are no barriers to entry and exit in monopolistic competition, which means the statement is not agreeable.

Economics Concept Introduction

Monopolistic competition: Monopolistic competition is a type of imperfect competition where many producers produce and sell differentiated products and there is freedom of entry and exit.

(b)

To determine

Whether the monopolistically competitive firms are efficient in the long run.

(b)

Expert Solution

Answer to Problem 1P

Disagree.

Explanation of Solution

There are large number of buyers and sellers, product differentiation as well as freedom of entry and exit into and out of the market under the monopolistic competition. However, it is important to note that the price in the monopolistic competition does not equal the marginal cost either in the short run or in the long run, which means that the monopolistically competitive industry is not efficient in the long run. Thus, the statement is not agreeable.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

At the 8:10 café, there are equal numbers of two types of customers with the following values. The café owner cannot distinguish between the two types of students because many students without early classes arrive early anyway (that is she cannot price discriminate). Students with early classes Students without early classes Coffee 70 60 Banana 50 100 The MC of coffee is 10. The MC of a banana is 40. Is bundling more profitable than selling separately? HINT: if you sell the bundle, can you make more by offering coffee separately? If so, what price should be charged for the bundle? (Show calculations)

Your marketing department has identified the following customer demographics in the following table. Construct a demand curve and determine the profit maximizing price as well as the expected profit if MC=$1. The number of customers in the target population is 10,000. Use the following demand data: Group Value Frequency Baby boomers $5 20% Generation X $4 10% Generation Y $3 10% `Tweeners $2 10% Seniors $2 10% Others $0 40%

Your marketing department has identified the following customer demographics in the following table. Construct a demand curve and determine the profit maximizing price as well as the expected profit if MC=$1. The number of customers in the target population is 10,000. Group Value Frequency Baby boomers $5 20% Generation X $4 10% Generation Y $3 10% `Tweeners $2 10% Seniors $2 10% Others $0 40% ur marketing department has identified the following customer demographics in the following table. Construct a demand curve and determine the profit maximizing price as well as the expected profit if MC=$1. The number of customers in the target population is 10,000.

Answer 2

Question

Chapter 15, Problem 1P

(a)

To determine

Whether the monopolistically competitive firms produce economic profits because they are protected.

(a)

Expert Solution

Answer to Problem 1P

Disagree.

Explanation of Solution

There are many buyers and sellers in the market. The sellers sell differentiated products which means there is competition in the market. However, it is important to note that there are no barriers to entry and exit in monopolistic competition, which means the statement is not agreeable.

Economics Concept Introduction

Monopolistic competition: Monopolistic competition is a type of imperfect competition where many producers produce and sell differentiated products and there is freedom of entry and exit.

(b)

To determine

Whether the monopolistically competitive firms are efficient in the long run.

(b)

Expert Solution

Answer to Problem 1P

Disagree.

Explanation of Solution

There are large number of buyers and sellers, product differentiation as well as freedom of entry and exit into and out of the market under the monopolistic competition. However, it is important to note that the price in the monopolistic competition does not equal the marginal cost either in the short run or in the long run, which means that the monopolistically competitive industry is not efficient in the long run. Thus, the statement is not agreeable.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 15, Problem 1P

(a)

To determine

Whether the monopolistically competitive firms produce economic profits because they are protected.

(a)

Expert Solution

Answer to Problem 1P

Disagree.

Explanation of Solution

There are many buyers and sellers in the market. The sellers sell differentiated products which means there is competition in the market. However, it is important to note that there are no barriers to entry and exit in monopolistic competition, which means the statement is not agreeable.

Economics Concept Introduction

Monopolistic competition: Monopolistic competition is a type of imperfect competition where many producers produce and sell differentiated products and there is freedom of entry and exit.

(b)

To determine

Whether the monopolistically competitive firms are efficient in the long run.

(b)

Expert Solution

Answer to Problem 1P

Disagree.

Explanation of Solution

There are large number of buyers and sellers, product differentiation as well as freedom of entry and exit into and out of the market under the monopolistic competition. However, it is important to note that the price in the monopolistic competition does not equal the marginal cost either in the short run or in the long run, which means that the monopolistically competitive industry is not efficient in the long run. Thus, the statement is not agreeable.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 15, Problem 1P

(a)

To determine

Whether the monopolistically competitive firms produce economic profits because they are protected.

(a)

Expert Solution

Answer to Problem 1P

Disagree.

Explanation of Solution

There are many buyers and sellers in the market. The sellers sell differentiated products which means there is competition in the market. However, it is important to note that there are no barriers to entry and exit in monopolistic competition, which means the statement is not agreeable.

Economics Concept Introduction

Monopolistic competition: Monopolistic competition is a type of imperfect competition where many producers produce and sell differentiated products and there is freedom of entry and exit.

(b)

To determine

Whether the monopolistically competitive firms are efficient in the long run.

(b)

Expert Solution

Answer to Problem 1P

Disagree.

Explanation of Solution

There are large number of buyers and sellers, product differentiation as well as freedom of entry and exit into and out of the market under the monopolistic competition. However, it is important to note that the price in the monopolistic competition does not equal the marginal cost either in the short run or in the long run, which means that the monopolistically competitive industry is not efficient in the long run. Thus, the statement is not agreeable.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 15, Problem 1P

(a)

To determine

Whether the monopolistically competitive firms produce economic profits because they are protected.

(a)

Expert Solution

Answer to Problem 1P

Disagree.

Explanation of Solution

There are many buyers and sellers in the market. The sellers sell differentiated products which means there is competition in the market. However, it is important to note that there are no barriers to entry and exit in monopolistic competition, which means the statement is not agreeable.

Economics Concept Introduction

Monopolistic competition: Monopolistic competition is a type of imperfect competition where many producers produce and sell differentiated products and there is freedom of entry and exit.

(b)

To determine

Whether the monopolistically competitive firms are efficient in the long run.

(b)

Expert Solution

Answer to Problem 1P

Disagree.

Explanation of Solution

There are large number of buyers and sellers, product differentiation as well as freedom of entry and exit into and out of the market under the monopolistic competition. However, it is important to note that the price in the monopolistic competition does not equal the marginal cost either in the short run or in the long run, which means that the monopolistically competitive industry is not efficient in the long run. Thus, the statement is not agreeable.

Answer 6

Chapter 15, Problem 1P

(a)

To determine

Whether the monopolistically competitive firms produce economic profits because they are protected.

(a)

Expert Solution

Answer to Problem 1P

Disagree.

Explanation of Solution

There are many buyers and sellers in the market. The sellers sell differentiated products which means there is competition in the market. However, it is important to note that there are no barriers to entry and exit in monopolistic competition, which means the statement is not agreeable.

Economics Concept Introduction

Monopolistic competition: Monopolistic competition is a type of imperfect competition where many producers produce and sell differentiated products and there is freedom of entry and exit.

Answer 7

Chapter 15, Problem 1P

(a)

To determine

Whether the monopolistically competitive firms produce economic profits because they are protected.

Answer 8

(a)

Expert Solution

Answer to Problem 1P

Disagree.

Answer 9

(a)

Expert Solution

Answer 10

(a)

Expert Solution

Answer 11

Expert Solution

Answer 12

Explanation of Solution

There are many buyers and sellers in the market. The sellers sell differentiated products which means there is competition in the market. However, it is important to note that there are no barriers to entry and exit in monopolistic competition, which means the statement is not agreeable.

Answer 13

Economics Concept Introduction

Monopolistic competition: Monopolistic competition is a type of imperfect competition where many producers produce and sell differentiated products and there is freedom of entry and exit.

Answer 14

(b)

To determine

Whether the monopolistically competitive firms are efficient in the long run.

(b)

Expert Solution

Answer to Problem 1P

Disagree.

Explanation of Solution

There are large number of buyers and sellers, product differentiation as well as freedom of entry and exit into and out of the market under the monopolistic competition. However, it is important to note that the price in the monopolistic competition does not equal the marginal cost either in the short run or in the long run, which means that the monopolistically competitive industry is not efficient in the long run. Thus, the statement is not agreeable.

Answer 15

(b)

To determine

Whether the monopolistically competitive firms are efficient in the long run.

Answer 16

(b)

Expert Solution

Answer to Problem 1P

Disagree.

Answer 17

(b)

Expert Solution

Answer 18

(b)

Expert Solution

Answer 19

Expert Solution

Answer 20

Explanation of Solution

There are large number of buyers and sellers, product differentiation as well as freedom of entry and exit into and out of the market under the monopolistic competition. However, it is important to note that the price in the monopolistic competition does not equal the marginal cost either in the short run or in the long run, which means that the monopolistically competitive industry is not efficient in the long run. Thus, the statement is not agreeable.