4. Is monopolistic competition efficient? Suppose that a company operates in the monopolistically competitive market for denim jackets. The following graph shows the demand curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve for the firm. Place a black point (plus symbol) on the graph to indicate the long-run monopolistically competitive equilibrium price and quantity for this firm. Next, place a grey point (star symbol) to indicate the minimum average total cost the firm faces and the quantity associated with that cost. PRICE (Dollars per jacket) 2222 SSRR2- 100 MO 10 ATC MR 29 30 40 50 60 70 80 QUANTITY (Thousands of jackets) Demand 90 100 Mon Comp Outcome Min Unit Cost

4. Is monopolistic competition efficient? Suppose that a company operates in the monopolistically competitive market for denim jackets. The following graph shows the demand curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve for the firm. Place a black point (plus symbol) on the graph to indicate the long-run monopolistically competitive equilibrium price and quantity for this firm. Next, place a grey point (star symbol) to indicate the minimum average total cost the firm faces and the quantity associated with that cost. PRICE (Dollars per jacket) 2222 SSRR2- 100 MO 10 ATC MR 29 30 40 50 60 70 80 QUANTITY (Thousands of jackets) Demand 90 100 Mon Comp Outcome Min Unit Cost

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter10: Monopolistic Competition And Oligopoly

Section: Chapter Questions

Problem 4QFR

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Suppose that a firm produces baseball bats in a monopolistically competitive market. The following graph shows its demand curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve. Place a black point (plus symbol) on the graph to indicate the long-run monopolistically competitive equilibrium price and quantity for this firm. Next, place a grey point (star symbol) to indicate the minimum average total cost the firm faces and the quantity associated with that cost. 100 90 Mon Comp Outcome 80 70 60 Min Unit Cost 50 ATC 40 30 20 10 MC MR Demand 10 20 30 40 50 60 70 80 90 100 QUANTITY (Thousands of bats) PRICE (Dollars per bat)
The American market for shoes is a good example of monopolistic competition. In a situation where Adidas is earning a large economic profit in the short-run, Nikemay try to increase their advertising to capture some of that business, If Nike is successful in their campaign, what would happen to the demand curve for Adidas and the price at which they can sell?O a. The demand curve shifts up and to the right, and the price rises.O b. The demand curve shifts up and to the right, and the price falls.O c. The demand curve shifts down and to the left, and the price walls.O d. The demand curve shifts down and to the left, and the price rises.Oe. Nike cannot affect the demand for Adidas since this is a monopolistically competitive market.
Suppose that a firm produces wool jackets in a monopolistically competitive market. The following graph shows its demand curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve. Place a black point (plus symbol) on the graph to indicate the long-run monopolistically competitive equilibrium price and quantity for this firm. Next, place a grey point (star symbol) to indicate the minimum average total cost the firm faces and the quantity associated with that cost. (?) PRICE (Dollars perjacket) 100 90 80 70 60 50 40 30 20 10 0 0 MC 10 ATC MR 20 30 40 50 80 70 QUANTITY (Thousands of jackets) 80 Demand 90 100 O F ++ Mon Comp Outcome Min Unit Cost hp e
7. Is monopolistic competition efficient? Suppose that a company operates in the monopolistically competitive market for rugby kits. The following graph shows the demand curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve for the firm. Place a black point (plus symbol) on the graph to indicate the long-run monopolistically competitive equilibrium price and quantity for this firm. Next, place a grey point (star symbol) to indicate the minimum average total cost the firm faces and the quantity associated with that cost. PRICE (Dolars per 3822ESRR 2 100 70 20 0 MO 6 19 20 ATC MR 30 AS 50 40 70 QUANTITY (Thousands of kits); Demand 8 100 Mon Comp Outcome Min Unit Cost C
at the Because this market is a monopolistically competitive market, you can tell that it is in long-run equihbrium by the fact that the efficient scale. optimal quantity for each firm. Furthermore, the quantity the firm produces n long-run equilibrium is True or False: This indicates that there is a markup on marginal cost in the market for jackets. OTrue False
Submit All stion 17 of 30 Which statement best explains why consumers might benefit more from monopolistic competition than perfect competition? O The demand curve for a monopolistically competitive firm follows the law of demand, but the demand curve for a perfectly competitive firm does not. O Monopolistic competitors will use fewer resources per unit of output than perfect competitors, so overall output will be maximized. O The benefits of having more variety offsets the losses from productive and allocative inefficiencies. The balance between marginal cost and price in monopolistic competition ensures that the optimal level of output will be produced. 8: 46°F > 节 a
If the firms in a monopolistically competitive market are earning economic profits in the short run, would you expect them to continue doing so in the long run? ● They will be unable to earn economic profits in the long run O They will always be able to earn economic profits in the long run. O They can continue to do so in the long run if new entries cannot completely erase the differentiation in their product. O Monopolisitc companies cannot earn economic profits in the long run unless government regulations help them achieve their goal of economic profits.
1. Is a monopolistically competitive firm productively efficient? Is it allocatively efficient? Why or why not? 2. What stops oligopolists from acting together as a monopolist and earning the highest possible level of profits? Is there a way for oligopolists to attempt to maximize profits? What are the risks of such attempts (and utimately, generally cause such attempts to fail)?
Which of the following is a difference between a monopolistically compettive market and a monopoly in the long run? OA. Firms in a monopolistically competitive market eam zero economic profits in the long run, while a monopolist incurs losses in the long run. B. Firms in a monopolistically competitive market charge a price higher than marginal cast in the long run, while a monopolist charges a price equal to marginal cast in the long run OC. Firms in a monopolistically competitive market car zero economic profits in the long run, while a monopolist usually carns positive economic profits in the long run. OD. Firms in a monopolistically competitive market charge a price lower than merginal cost in the long run, while a monopolist charges a price equal to merginel cost in the long run.
Figure 17-2 This figure depicts a situation in a monopolistically competitive market. 100 PRICE 90 80 70 887889 60 50 40 30 20 10 MC MR ATC Demand 10 20 30 40 50 60 70 80 90 100 QUANTITY Refer to Figure 17-2. How much profit will the monopolistically competitive firm earn in this situation? O a. $80 O b. $400 O c. $0 O d. $200
Figure 17-2 This figure depicts a situation in a monopolistically competitive market. 100 PRICE 90 80 70 60 50 40 30 20 10 MC MR ATC Demand 10 20 30 40 50 60 70 80 90 100 QUANTITY Refer to Figure 17-2. How much output will the monopolistically competitive firm produce in this situation? O a. 25 units b. 20 units O c.40 units O d. 80 units
Which of the following is correct? O A purely competitive firm is a "price taker," while a monopolist is a "price maker." OA purely competitive firm is a "price maker," while a monopolist is a "price taker." O Both purely competitive and monopolistic firms are "price takers." Both purely competitive and monopolistic firms are "price makers."