3. Magnificent Blooms is a florist in a monopolistically competitive industry. It is producing the quantity that minimizes its average total cost and making a profit. Yet, the owner also says (correctly) that at its current level of output, its marginal cost is above marginal revenue. a. Illustrate the current situation of Magnificent Blooms in a diagram. b. In the above short-run situation, could Magnificent Blooms increase its profit by producing more or less? If so, how? If not, why not? c. In the long run, is Magnificent Blooms able to increase its profit by producing more or less? If so, how? If not, why not?

3. Magnificent Blooms is a florist in a monopolistically competitive industry. It is producing the quantity that minimizes its average total cost and making a profit. Yet, the owner also says (correctly) that at its current level of output, its marginal cost is above marginal revenue. a. Illustrate the current situation of Magnificent Blooms in a diagram. b. In the above short-run situation, could Magnificent Blooms increase its profit by producing more or less? If so, how? If not, why not? c. In the long run, is Magnificent Blooms able to increase its profit by producing more or less? If so, how? If not, why not?

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter10: Monopolistic Competition And Oligopoly

Section: Chapter Questions

Problem 1.1P

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