Mary competes in a monopolistically competitive market. Suddenly, 5 new firms enter the market, causing her perceived demand curve to shift. The following tables show her original and new demand curves and her cost information. Original Demand Curve PriceQuantityTC 300$130 2510$140 2020$260 1530$450 1040$660 New Demand Curve PriceQuantityTC 250$130 2010$140 1520$260 1030$450 540$660 Assume that Mary can only choose from the quantities of output given in the table. By how much will the quantity that she produces change after the new firms enter the market?Question 4 options: increase by 5 decrease by 5 increase by 10 decrease by 10

We have to calculate how much will the quantity that Mary produces change after the new firm's enter…

Answered: Mary competes in a monopolistically…

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter14: Monopolistic Competition And Product Differentiation

Section: Chapter Questions

Problem 5P

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Mary competes in a monopolistically competitive market. Suddenly, 5 new firms enter the market, causing her perceived demand curve to shift. The following tables show her original and new demand curves and her cost information.

Original Demand Curve
*Price*	*Quantity*	TC
30	0	$130
25	10	$140
20	20	$260
15	30	$450
10	40	$660
New Demand Curve
*Price*	*Quantity*	TC
25	0	$130
20	10	$140
15	20	$260
10	30	$450
5	40	$660

Assume that Mary can only choose from the quantities of output given in the table. By how much will the quantity that she produces change after the new firms enter the market?

Question 4 options:

	increase by 5
	decrease by 5
	increase by 10
	decrease by 10

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