Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 17, Problem 5SPPA
To determine
To explain:
The behaviour of firms in long-run, whether they will arrive in the shoes market or exit from the market in long-run.
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G, 13
Economics
What is the first item to identify when determining the short-run equilibrium for a monopolistically competitive firm?
a. the total profits
b. the total revenue
C. the total costs
d. the profit-maximizing level of output
Draw a diagram to show the long-run equilibrium of a firm in a Monopolistically Competitive market clearly labeling the profit maximizing level of Q and P. Is P greater/less than ATC? Is P greater/less than MC? How much profit firm is earning in the long run? Also show the efficient level of outcome and explain why this firm does not produce at the efficient level.
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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- The graph shows the demand curve, marginal revenue curve, and marginal cost curve of Java Time, Inc., a producer of espresso machines in monopolistic competition. Draw a point at the firm's the profit-maximizing price and quantity. Label it 1. Draw an arrow that shows Java Time's markup. Draw the average total cost curve such that Java Time does not have excess capacity. Label it. Draw a point at the intersection of the ATC curve and the MC curve. Label it 2. Java Time's markup is $a machine. 240 220- 200- 180- 160- 140 120- 100- 80- 60- 40- 20- 04 0 Price and cost (dollars per machine) MC 100 200 300 400 Quantity (espresso machines per week) D MR 500arrow_forwardA perfectly competitive firm is onsidered to be more generous in terms of price and quantity of output in comparison to firm belonged to monopoly and monopolistic markets. C. If firms incurring loss in this market begin to exit the market, what will happen to the market equilibrium? Demonstrate your answer using a simplified graph. d. The firm wishes to supply output more than the quantity determined under the equilibrium condition, is it worth to pursue?arrow_forwardIn the long run monopolistically competitive firms are inherently inefficient. do you agree? explainarrow_forward
- In the short run, what quantity does Lite and Kool produce, what price does it charge, and does it make an economic profit?arrow_forwardGive typing answer with explanation and conclusionarrow_forwardGive two characteristics of the following:a. a perfectly competitive marketb. a monopolistic marketarrow_forward
- The monopolistically competitive firm represented in the graph is in: $ $11.40 $10.20 $7.50 0 520 630 MC ATC MR Firm's Demand Quantity Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a long-run equilibrium since it is earning zero profit. b short-run equilibrium since it is earning zero profit. C short-run equilibrium, but not long-run equilibrium since it is earning positive economic profit. d long-run equilibrium, but not short-run equilibrium since it is earning positive economic profit. Your answerarrow_forwardA perfectly competitive firm is considered to be more generous in terms of price and quantity of output in comparison to firm belonged to monopoly and monopolistic markets. a. Demonstrate a simplified graph to show that a perfectly competitive firm incurring loss, but has reached the minimum condition to keep operating in the market. b. Does the firm operate in the short or long run based on your answer to question (a). Why?arrow_forwardConsider the diagram below depicting the revenue and cost conditions faced by a monopolistically competitive firm, and then answer the following questions. $40 $35 $30 MC ATC $25 $20 $17 A $15 $10 4.40 $5 3.25 MR Demand 3 4 5 7 8 9 10 Quantity Instructions: Round your answers to 2 decimal places. a. What is total revenue for this firm? $56.88 b. What is total cost for this firm? $ $58.88 c. What is this firm's economic profit? d. This firm is most likely In long-run ]equilibrlum because Instructions: In order to recelve full credit, you must make a selection for each option. For correct answer(s), click the box once to place a check mark. For Incorrect answer(s). click the option twice to empty the box. ? P= ATC. ? P> MC. ? MR = MC. 2 the firm is experlencing normal profits. 2 the firm is experlencing economic profits. 7 demand exceeds marginal revenue. Price and costsarrow_forward
- What is the edge of perfect competition to monopolistic competition? What is way more better? Explainarrow_forwardExplain monopolistic competition. How is it similar to perfect competition? How does it differ from perfect competition?arrow_forwardWhat is perfect competition? Distinguish it to monopolistic competition.arrow_forward
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