Gen Combo Managerial Economics & Business Strategy; Connect Access Card
9th Edition
ISBN: 9781260044294
Author: Baye
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 8, Problem 3CACQ
(A)
To determine
The firm's optimal outputis to be explained.
(B)
To determine
The firm's optimal priceis to be explained.
(C)
To determine
The firm's maximum profitis to be explained.
(D)
To determine
The adjustments that the manager should be anticipating is to be explained.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Westchesser Gloves is a monopolistically competitive firm that sells leather gloves.
Use the graph to highlight the area of profit or loss and answer the questions,
Price per pair (5)
10 20
Marginal
profit or loss: $
Aver co
Pairs of gloves (in thousand)
Demand
70 80 90 100
Profit or loss
Calculate Westchesser's profit or loss at the profit-maximizing price.
What will happen to the number of firms in this industry in the long run?
Firms will enter this industry, increasing the price at which each firm can sell their gloves until firms begin to earn
normal profits.
O Firms will exit this industry, increasing the price at which each firm can sell their gloves until firms begin to carn
normal profits.
O Firms will exit this industry, decreasing the price at which each firm can sell their gloves until firms begin to carn
normal profits.
O Firms will enter this industry, decreasing the price at which each firm can sell their gloves until firma begin to carn
normal profits
The following graph summarizes the demand and costs for a firm that operates in a monopolistically competitive market.
What is the firm’s optimal output?
2. What is the firm’s optimal price?
3. What are the firm’s maximum profits?
4. What adjustments should the manager be anticipating
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
LRAC
MR
Demand
100 150 200 250 300 350 400 450 500
QUANTITY (Units)
Monopolistically Competitive Outcome
Minimum of the LRAC
The long-run equilibrium price is $
(Hint: Use the graph to find the numeric value of the price at equilibrium.)
The long-run equilibrium quantity is
units.
The LRAC curve is at its minimum at a quantity of
The long-run equilibrium price is
units.
the marginal cost of producing the equilibrium output.
?
Chapter 8 Solutions
Gen Combo Managerial Economics & Business Strategy; Connect Access Card
Knowledge Booster
Similar questions
- Hello! I need help with this question. See screenshot. Thank you!arrow_forwardThe diagram shows a firm that produces tennis rackets in a monopolistically competitive market. Assume that it is operating in the short run. Is the firm earning a positive profit or suffering a loss in the short run? Explain what will happen to a typical firm in this industry in the long run, including characteristics of the firm in long run equilibrium. A diagram may be used as part of the explanation, but is not required.arrow_forwardQuestion 19 of 20 > O Macmillan Learning The accompanying graph depicts average total cost (ATC), marginal cost (MC), marginal revenue (M), and demand (D) facing a monopolistically competitive firm. Place point A at the firm's profit maximizing price and quantity. What is the firm's total cost? total cost: $ What is the firm's total revenue? total revenue: $ What is the firm's total profit? profit: $ Price and Cost ($) 50 45 40 35 30 25 20 15 10 5 MR MC ATC D 0 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95100 Quantityarrow_forward
- Draw a diagram that depicts the profit maximization of a perfectly competitive and monopolistic market.arrow_forwardWhy does price elasticity of demand play such an important role in Ogligopolistic markets?arrow_forwardThe graph below summarizes the demand and costs for a firm that operates in a monopolistically competitive market.Instruction: Use the nearest whole numbers on the graph when calculating numerical responses below.a. What is the firm’s optimal output? unitsb. What is the firm’s optimal price?$ c. What are the firm’s maximum profits?$ d. What adjustments should the manager be anticipating?multiple choice Demand will decrease over time as new firms enter the market. Demand will increase over time as firms exit the market. Demand will remain unchanged over time.arrow_forward
- Nonearrow_forwardWhat is the relationship between product differentiation and monopolistic competition?arrow_forwardDraw 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.arrow_forward
- Use the following graph for a monopolistically competitive firm to answer the next question. Dollars (5) 22 32 0 10 20 35 45 50 Quantity of Output (Units) This monopolistically competitive firm is earning economic profits in the short run and ATC Multiple Choice will continue to have economic profits in the long run will earn only normal profits in the long run this will cause its demand curve to shift to the right in the long run. this will cause its cost curves to rise in the long runarrow_forwardDraw a diagram depicting a firm that is making a profit in a monopolistically competitive market. Now show what happens to this firm as new firms enter the industry! *(based on the pictures)arrow_forwardDraw a digram showing the effect of a new firm entering a monopolistically competitive market. Your diagram should include new and old demand, marginal revenue, profit, MC, and ATC curves.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning