Principles of Economics
7th Edition
ISBN: 9781305156043
Author: N. Gregory Mankiw
Publisher: Cengage Learning US
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Question
Chapter 16, Problem 4PA
Subpart (a):
To determine
Categorizing a firm.
Subpart (b):
To determine
Categorizing a firm.
Subpart (c):
To determine
Categorizing a firm.
Subpart (d):
To determine
Categorizing a firm.
Subpart (e):
To determine
Categorizing a firm.
Subpart (f):
To determine
Categorizing a firm.
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For each of the following characteristics, say whether it describes a monopoly firm, a monopolistic competitive firm, both, or neither. a. faces a downward-sloping demand curve b. has marginal revenue less than price c. faces the entry of new firms selling similar products d. earns economic profit in the long run e. equates marginal revenue and marginal cost f. produces the socially efficient quantity of output
Which of the following statements is true about the difference between monopoly and monopolistic competition?
a.Monopolies always earn positive profits
b.Monopolistically competitive firms have no barriers to entry or exit
what market inefficiencies derive from monopolies and monopolistic competition?
Chapter 16 Solutions
Principles of Economics
Ch. 16.1 - Prob. 1QQCh. 16.2 - Prob. 2QQCh. 16.3 - Prob. 3QQCh. 16 - Prob. 1QRCh. 16 - Prob. 2QRCh. 16 - Prob. 3QRCh. 16 - Prob. 4QRCh. 16 - How might advertising reduce economic well-being?...Ch. 16 - Prob. 6QRCh. 16 - Prob. 7QR
Ch. 16 - Prob. 1QCMCCh. 16 - Prob. 2QCMCCh. 16 - Prob. 3QCMCCh. 16 - Prob. 4QCMCCh. 16 - Prob. 5QCMCCh. 16 - If advertising makes consumers more loyal to...Ch. 16 - Prob. 1PACh. 16 - Prob. 2PACh. 16 - Prob. 3PACh. 16 - Prob. 4PACh. 16 - Prob. 5PACh. 16 - Prob. 6PACh. 16 - Prob. 7PACh. 16 - Prob. 8PACh. 16 - Prob. 9PACh. 16 - Sleek Sneakers Co. is one of many firms in the...
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- Monopolistic competition creates inefficiency because of the Price markups and excess capacity. The graph depicts the situation $100 for a hypothetical monopolistically competitive firm. The 90 curves included in the graph are demand (D), marginal 80 revenue (MR), average total cost (ATC), and marginal cost ATC (MC). Use the graph to find the requested values. 70 60 What is the size of the markup on the price? 50 40 markup: $ 30 What is the size of the excess capacity? 20 MC MR 10 units excess capacity: 20 30 40 50 60 70 80 90 10 100 Quantityarrow_forwardWhich of the following statements regarding monopolistic and competitive markets is correct? In a perfectly competitive market, there is lots of advertising. In a monopolistic market, the firm receives no economic rent. In a monopolistic market, the firm is a price-setter. In a perfectly competitive market, firms invest in research and innovation. In which of the following markets is the equilibrium efficient? The market for a differentiated good. The market for labor, when workers' effort is non-verifiable. A competitive market for a homogenous good with no external effect. A competitive market for a homogenous good that generates pollution.arrow_forwardWhy is there a price markup over marginal cost in monopolistic competition? a downward-sloping demand curve, price exceeds marginal cost The graph shows the demand curve and marginal revenue curve of Whitewater, Inc., a producer of rubber rafts in monopolistic competition. Draw the marginal cost curve if the firm produces 150 rafts a week. Label it. Draw a point at the intersection of the MC and MR curves. Draw a point to show the price that Whitewater charges for a raft when it produces 150 rafts a week. Draw an arrow to show the amount of Whitewater's markup. What is Whitewater's markup? Whitewater's markup is $750 a raft. 750- 675- 600- 525- 450- 375- 300- 225- 150- 75- 0 Price and cost (dollars per raft) 50 100 150 Quantity (rafts per week) D MR 200 >>> Draw only the objects specified in the question. 21arrow_forward
- IV.arrow_forwardFrom 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.arrow_forwardhey how are you a)Draw the cost curves for a typical firm. Explain how a competitive firm chooses the level of output that maximizes profit. At that level of output, show on your graph the firm’s total revenue and total cost. b)Draw the demand curve, marginal revenue curve, average total cost curve, and marginal-cost curve for a monopolist. Show the profit-maximizing level of output, the profit-maximizing price, and the amount of profit. c)Why the demand curve for a firm operating in monopolistic competition is more elastic compared to the firm operating as a monopoly.arrow_forward
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- In the diagram below, when the competitive market is taken over by the monopolist, the monopolist is able to enjoy producer surplus in terms of the area(s)_ Dalam rajah di bawah, apabila pasaran kompetitif diambil alih oleh monopoli, monopoli dapat menikmati lebihan pengeluar sebanyak kawasan Price / Harga (P) D C B A C. E BCEH F d. BCEF Lin G QM H Qc SS = MC* MRM a. BCEH minus GFH / BCEH tolak GFH DD = P b. BCEF minus GFH / BCEF tolak GFH Output (Q)arrow_forwardGive an example of a market that has monopolistic competition and explain how the example you have chosen exhibits competitive aspects and how it also exhibits monopolistic aspects.arrow_forwardAssume a monopolistically competitive firm encounters a decrease in average variable cost at all output levels.We would expect: a. The price to rise and output to rise b. The price to fall and output to fall c. The price to rise and output to fall d. The price to fall and output to risearrow_forward
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