Answered: MC АТС Quantity Dollars per unit

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

(Monopolistic Competition and Perfect Competition Compared)
Illustrated below are the marginal cost and average
total cost curves for a small firm that is in long-run
equilibrium.
a. Locate the long-run equilibrium price and quantity if
the firm is perfectly competitive.
b. Label the price and quantity p1 and q1.
c. Draw in a demand and marginal revenue curve to illustrate
long-run equilibrium if the firm is monopolistically
competitive. Label the price and quantity p2 and q2 .
d. How do the monopolistically competitive firm’s price
and output compare to those of the perfectly competitive
firm?
e. How do long-run profits compare for the two types of
firms?

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