1. Consider a monopolistically competitive market with N firms. Each firm's business opportunities are described by the following equations: 100 Q(P) = - P C(Q) = 50 + Q² a. How does N, the number of firms in the market, affect each firm's demand curve? Why? b. How many units does each firm produce? (The answers to this and the next two questions depend on N.) c. What price does each firm charge?

1. Consider a monopolistically competitive market with N firms. Each firm's business opportunities are described by the following equations: 100 Q(P) = - P C(Q) = 50 + Q² a. How does N, the number of firms in the market, affect each firm's demand curve? Why? b. How many units does each firm produce? (The answers to this and the next two questions depend on N.) c. What price does each firm charge?

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter10: Monopolistic Competition And Oligopoly

Section: Chapter Questions

Problem 4QFR

See similar textbooks

Similar questions

The mobile phone industry is monopolistically competitive, and is described by Diagram A and Diagram B above. Samsung pursued a successful differentiation strategy and, as a result, is making a positive economic profit in the short run. PART A: Which diagram (Diagram A or Diagram B) represents Samsung’s situation in the short run and long run, respectively? PART B: Referring to the short-run diagram you selected in part a, identify Samsung’s short-run profit maximising output and explain how Samsung decided to produce this output. PART C: What is the price of each mobile phone? How much profit is Samsung making in the short run? Explain. PART D: Identify the area that represents consumer surplus. PART E: Explain how the other firms producing mobile phones would react to Samsung’s short-run positive economic profit. What would be the long-run impact on Samsung’s output, price and profit? Illustrate your answer with the long-run diagram you identified in part A. PART F:…
In what sense do monopolistically competitive firms have market power? Question 1Answer a. Firms in the long run will earn zero economic profits b. The demand curve that a typical firm faces is negatively sloped c. Because of brand loyalty, a firm can raise the price of its product without worrying that any of its customers will switch to buy other similar brands d. All of the answers are correct
Question 5 Based on market research, a film production company (monopolistically competitive firm) in Ectenia obtains the following information about the demand and production costs of its new DVD: Demand: P = 1,000 − 10Q Total Revenue: TR = 1,000Q − 10Q2 Marginal Revenue: MR = 1,000 − 20Q Marginal Cost: MC = 100 + 10Q where Q indicates the number of copies sold and P is the price in Ectenian dollars. a. Find the price and quantity that maximize the company’s profit. b. Find the price and quantity that would maximize social welfare. c. Calculate the deadweight loss from monopoly.
Consider a monopolistically competitive market with N firms. Each firm's business opportunities are described by the following equations: Demand: Q=100/N-P Marginal Revenue: MR=100/N-2Q Total Cost: TC=50+Q2 Marginal Cost: MC=2Q a. How does N, the number of firms in the market , affect each firms demand curve? Why? b. How many units does each firm produce? (The answer to this and the next two questions depend on N) c. What price does each firm charge? d. How much profit does each firm make? e. In the long run, how many firms will exist in this market?
The mobile phone industry is monopolistically competitive, and is described by Diagram A and Diagram B above. Samsung pursued a successful differentiation strategy and, as a result, is making a positive economic profit in the short run. A: Identify the area that represents consumer surplus. B: Explain how the other firms producing mobile phones would react to Samsung’s short-run positive economic profit. What would be the long-run impact on Samsung’s output, price and profit? C: In the long run, Samsung is inefficient and has excess capacity. Identify the inefficiency and excess capacity on the long-run diagram and explain why they occur.
Suppose,initially there is a positive profit obtained by a firm in monopolistic competition.Explain how the adjustment to the long-run equilibrium will take place in the monopolistic competitive market.why will there be excess capacity in the long-run equilibrium in this scenario?Provide adequate graph to supplement your answer.
Assume the following equations describe the conditions for a typical firm in a monopolistically competitive market: P = 6 - .00075qd TC = 4,000 + 2q + .00025q2 where qd is the firm's quantity demanded, P is the commodity's price in dollars, TC is the firm's total cost in dollars and q is the quantity of output produced. Based upon these equations, answer the following questions: a. What quantity of output will the profit-maximizing firm produce in the market's long-run equilibrium? What price will the profit-maximizing firm establish in the long run? Explain how you know this firm is in long-run equilibrium? b. Determine the firm's allocatively efficient quantity of output? c. Determine deadweight loss that exists when this firm is in monopolisitc competition's long-run equilibrium.
Suppose the monopolistically competitive barber shop industry in a community is in long-run equilibrium, and that the typical price is $20 per haircut. Moreover, the population is rising. 1. Illustrate the short-run effects of a change on the price and output of a typical firm in the market. 2. Show what happens in the long run. Will the final price be higher than $20? Equal $20? Be less than $20? Assume that nothing happens to the cost of producing haircuts. 3. Suppose that, initially, the price of a typical children’s haircut is $10. Do you think this represents price discrimination? Why or why not?
A firm in monopolistic competition produces an output level Q1 = 100 where marginal revenue is equal to marginal cost. At this output level, the price is P1 = $75 and the average total cost is ATC1 = $25. 1. Draw the graph for the monopolistically competitive firm in the short-run equilibrium using the numbers provided above (include ATC, D, MC, and MR curves). Label everything! 2. At this output of Q1 = 100, calculate: total revenue (TR), total cost (TC), and profit in the short-run. Show your work (formulas and calculations). 3. On the graph, show the markup and the excess capacity for this firm. 4. In the long run, what will happen to the profit earned by the firm? 5. Draw the graph for the monopolistically competitive firm in long-run equilibrium.
QUESTION 13 A monopolistic competitive firm. a)As presented in Exhibit, the long-run profit-maximizing output for the monopolistic competitive firm is? b) To maximize long-run profits, the monopolistically competitive firm shown in Exhibit will charge a price per unit of ?
A firm in monopolistic competition produces an output level Q1 = 100 where marginal revenue is equal to marginal cost. At this output level, the price is P1 = $75 and the average total cost is ATC1 = $25. Draw the graph for the monopolistically competitive firm in the short-run equilibrium using the numbers provided above (include ATC, D, MC, and MR curves). Label everything! On the graph, show the markup and the excess capacity for this firm. Draw the graph for the monopolistically competitive firm in long-run equilibrium
In a monopolistically competitive industry, a firm has a short-run and long-run cost function C = 150 + 20Q + 5Q2 The demand function for the firm's product is Q = α – P. (C = cost, Q = quantity, P = price, α = parameter). (i) If α = 116 short, determine the quantity, the price and profit of the business. (ii) What is the firm's demand function at long term equilibrium? MAKE A GRAPH