3. Discuss the long debate of economists whether there is a significant loss of well-being to society in markets that are monopolistically competitive rather than perfectly competitive
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3. Discuss the long debate of economists whether there is a significant loss of well-being to society in markets that are
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- Suppose that, due to a successful advertising campaign, a monopolistic competitor experiences an increase in demand for its product. How will that affect the price it charges and the quantity it supplies?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)?What are the most important differences between perfectly competitive markets and monopolistically competitive markets? Give two examples of products sold in perfectly competitive markets and two examples of products sold in monopolistically competitive markets.
- 4. 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 (Dollars per kit) 100 90 80 70 60 50 40 30 20 10 0 0 MC 10 True ATC False MR 20 30 40 50 60 70 QUANTITY (Thousands of kits) 80 Demand 90 100 Mon Comp Outcome Because this market is monopolistically competitive, you can tell that it is in long-run equilibrium by the fact that for each firm. Further, a monopolistically competitive firm's average total cost in long-run equilibrium is cost. Min Unit Cost True or False: This…4. 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. → Show Transcribed Text 100 90 80 70 8 PRICE (Dollars per kit) 50 40 30 20 10 0 0 MC 10 ATC 3 c MR 20 30 40 50 60 70 80 QUANTITY (Thousands of kits) Demand 90 100 Mon Comp Outcome Min Unit Cost4. 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 (Dollars per kit) 100 90 80 70 60 50 40 30 20 10 0 MC 0 10 20 ATC MR Demand 30 40 50 60 70 QUANTITY (Thousands of kits) 80 90 100 + Mon Comp Outcome Min Unit Cost
- #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?24. Consider the case of two restaurants in a community. One is a McDonald's and the other is a Burger King. Also consider the case of a wheat farmer in Nebraska and a wheat farmer in Oklahoma. The restaurants can be considered to be in a monopolistically competitive industry and the wheat farmers in a perfectly competitive industry. Both industries supply food. Why is there a difference? a. Restaurants are a market with a differentiated product, and agriculture is considered in a market with homogenous products. b. Restaurants are in a market with high barriers to entry, and agriculture is in a market with low barriers to entry. Both markets are considered industries with asymmetric knowledge (lack of perfect c. knowledge) of market conditions. In monopolistic competition it is the buyer who has the lack of perfect knowledge, and in perfect competition it is the seller who has the lack of perfect knowledge. d. All of the above3. How short-run profit or losses induce entry or exit Citrus Scooters is a company that manufactures electric scooters in a monopolistically competitive market. The following graph shows the demand curve, marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC) for Citrus. Place the black point (plus symbol) on the graph to indicate the short-run profit-maximizing price and quantity for this monopolistically competitive company. Then, use the green rectangle (triangle symbols) to shade the area representing the company's profit or loss. PRICE (Dollars per scooter) 500 450 400 350 300 250 200 150 100 50 0 0 MC 50 100 ATC MR Demand 150 200 250 300 350 400 450 500 QUANTITY (Scooters) + Monopolistically Competitive Outcome Given the profit-maximizing choice of output and price, Citrus Scooters is earning Profit or Loss sellers in the industry relative to the long-run equilibrium amount. profit, which means there are
- 3. How short-run profit or losses induce entry or exit Citrus Scooters is a company that manufactures electric scooters in a monopolistically competitive market. The following graph shows the demand curve, marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC) for Citrus. Place the black point (plus symbol) on the graph to indicate the short-run profit-maximizing price and quantity for this monopolistically competitive company. Then, use the green rectangle (triangle symbols) to shade the area representing the company's profit or loss. (?) PRICE (Dollars per scooter) 500 450 400 350 300 250 200 150 100 50 0 0 MC 50 100 ATC MR Demand 150 200 250 300 350 400 450 500 QUANTITY (Scooters) + Monopolistically Competitive Outcome Profit or Loss Given the profit-maximizing choice of output and price, Citrus Scooters is earning sellers in the industry relative to the long-run equilibrium amount. Now consider the long run in which scooter manufacturers are free…3. Is monopolistic competition efficient? Suppose that a firm produces wooden train engines 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 per engine) 100 90 80 70 60 50 40 30 20 10 0 0 MC ATC MR Demand 10 20 30 40 50 60 70 80 90 100 QUANTITY (Thousands of engines) + Mon Comp Outcome Min Unit Cost Because this market is a monopolistically competitive market, you can tell that it is in long-run equilibrium by the fact that optimal quantity for each firm. Furthermore, a monopolistically competitive firm's average total cost in long-run equilibrium is minimum…3. Is monopolistic competition efficient? Suppose that a firm produces wooden train engines 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 per engine) 100 90 80 70 60 50 40 30 20 10 0 0 MC T ATC MR Demand 10 20 30 40 50 60 70 80 90 100 QUANTITY (Thousands of engines) Mon Comp Outcome Min Unit Cost Please help me graph the monopolistic competition outcome and the minimum unit cost.
