Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 17, Problem 3MCQ
To determine
To Choose:
Among the given options the one that satisfies the given statement:
Profit in a
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. Competitors in monopolistic competition have full
control over-
(A) The price of their product
(B) Product quality
(C) The shape of the market demand curve
(D) The elasticity of product substitutions
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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
Which form is a monopolistic competitor operating in the long run?
Chapter 17 Solutions
Foundations of Economics (8th Edition)
Ch. 17 - Prob. 1SPPACh. 17 - Prob. 2SPPACh. 17 - Prob. 3SPPACh. 17 - Prob. 4SPPACh. 17 - Prob. 5SPPACh. 17 - Prob. 6SPPACh. 17 - Prob. 7SPPACh. 17 - Prob. 8SPPACh. 17 - Prob. 9SPPACh. 17 - Prob. 10SPPA
Ch. 17 - Washtenaw Dairy in Ann Arbor, Michigan, sells 63...Ch. 17 - Prob. 2IAPACh. 17 - Prob. 3IAPACh. 17 - Prob. 4IAPACh. 17 - Prob. 5IAPACh. 17 - Use the following information to work Problems 5...Ch. 17 - Prob. 7IAPACh. 17 - Prob. 8IAPACh. 17 - Prob. 9IAPACh. 17 - Prob. 1MCQCh. 17 - Prob. 2MCQCh. 17 - Prob. 3MCQCh. 17 - Prob. 4MCQCh. 17 - Prob. 5MCQCh. 17 - Prob. 6MCQCh. 17 - Prob. 7MCQ
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- Explain your reasons 1.If demand is elastic, the difference between the monopolistic price and the competitive market price would be greater compared to when the elasticity is low. 2. In 2011, heavy rain and cold weather destroyed 10 percent of the world coffee products. Therefore, it is expected that people consume less coffee.arrow_forwardThe information below provides conditions faced by a monopolistically competitive firm. Price and costs $70 $65 $60 $55 $50 $45 $40 $40 $35 $30 $25 $250 $20455 $15 $10 $5 0 $32.50 MIR Quantity MC ATC Demand Use the information above to answer the following question. This monopolistically competitive firm's economic profit/loss is $.arrow_forwardSuppose new firms enter a monopolistically competitive market. What is the effect of new firms entering the market from the perspective of the firms that were already in the market? Question 11Answer a. Positive supply shock b. Positive demand shock c. No effect d. Negative supply shock e. Negative demand shockarrow_forward
- 3. Study Questions and Problems #3 The following graph represents a monopolistically competitive firm in long-run equilibrium. Place the black point (cross sign) on the graph to indicate the short-run profit-maximizing price and quantity for this monopolistically competitive company. Next, place the grey star on the graph to indicate the point where the LRAC reaches a minimum. PRICE PER UNIT (Dollars) 500 450 400 350 300 250 200 150 100 50 MC 0 + 0 50 100 LRAC MR Demand 150 200 250 300 350 400 450 500 QUANTITY (Units) True or False: The long-run equilibrium price is $235 per unit. True False True or False: The long-run equilibrium quantity is 185 units. True O False True or False: The LRAC curve is at its minimum at a quantity of 100 units. Monopolistically Competitive Outcome Minimum of the LRAC ?arrow_forwardplease answer letter D only and provide with complete and neat solution thank youarrow_forwardThe cost of producing a tube of tooth paste is $0.05. If the market for tooth paste is monopolistically competitive, a manufacturer who charges $0.05 for each bottle will ________. a. exit the industry in the long run b. earn zero economic profits in the short run c. incur a loss in the short run d. shut down production in the short runarrow_forward
- 1. Under the model of monopolistic competition, a(an) ________ in the number of firms in the industry will cause ________ to ________. 2. In the model of monopolistic competition, if the price is ______ than average costs, then firms are earning __________ economic profit and we should expect firms to _________ the industry. 3. In the model of monopolistic competition, if an industry has large ________ relative to another industry, then we should expect _________ firms to operate in a long-run equilibrium of that industry.arrow_forwardA monopolistically competitive firm faces the following demand and cost structure in the short run: Output Price FC VC TC TR Profit/Loss 0 $100 $100 $ 0 ____ ____ ________ 1 90 ____ 50 ____ ____ ________ 2 80 ____ 90 ____ ____ ________ 3 70 ____ 150 ____ ____ ________ 4 60 ____ 230 ____ ____ ________ 5 50 ____ 330 ____…arrow_forwardNumber 51: A monopolistic firm's demand, MR, MC and ATC curves MC ATC P A A Quantity 1. How much output will this firm produce and what price will it charge if it wants to: maximize its total revenues? -maximize its profits? Multiple Choices for both: A. Q1 and P1 B. Q2 and P2 C. Q3 and P3 2. How much output will this firm produce and what price will it charge if it is mandated by the government to produce at the socially desirable or efficient output level? Q1 and P1 Q2 and P2 Choices: Q3 and P3 | 3. How much is the DWL that arises when this firm produces the profit maximizing output level? 1/2(P1-P2) (01-02) 1/2(P1-P3)(Q1-Q3) choices: 1/2(P1-P3)(01-02)arrow_forward
- Exercise A.8. The graph below corresponds to a company operating in a market under conditions of monopolistic competition: € 5 4 3 2 1 CM CMe 20 40 60 90 100 120 Quantity of output a) What is the level of production maximizes the short-term profits of this company? b) What price will the company charge to maximize its profits? c) What benefits does the company obtain in the short term? d) How would advertising affect the curves shown in the graph? Would profits necessarily increase? Reason your answers.arrow_forward#3) Draw a diagram of the long run equilibrium in a monopolistically competitive market. How is price related to average total cost? How is price related to marginal cost?arrow_forwardRefer to Figure 1. If the market price is $2, what the firm will do? Enable Editing 4) Use the figure below to answer the following questions. Price and cost (dollars per unit) 80 MC 60 40 ATC 20 MR 20 40 60 80 100 Quantity (units per week) Figure 2 a) Refer to Figure 2 If this firm is in monopolistic competition, what is its output? b) Refer to Figure 2 If this firm is in monopolistic competition, what is the price it will charge? c) Refer to Figure 2. What is the firm profit situation? What time frame equilibrium is the firm? d) Refer to Figure 2. If this firm in monopolistic competition is in short-run equilibrium, and the firm making profit what will happen in the long run to the firm profit? explainarrow_forward
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