9. Perfect Competition The market for peanut butter in Nutville is monopolistically competitive and in long-run equilibrium. The following graph shows the marginal-cost (MC) curve and the average-total-cost (ATC) curve for a peanut-butter-producing firm. It also shows the demand curve and marginal-revenue (MR) curve faced by a firm operating in a monopolistically competitive environment. On the following graph, use the black point (plus symbol) to show the profit-maximizing output and price for a typical firm operating in a monopolistically competitive environment. Price, Cost, Revenue Demand MC- ATC MR Quantity + Profit Max Under MC Perfect Comp. Outcome One day, consumer advocate Skippy Jif discovers that all brands of peanut butter in Nutville are identical. Thereafter, the market becomes perfectly competitive and again reaches its long-run equilibrium. On the previous graph, use the grey point (star symbol) to show the market price in this case and the quantity produced by each firm. Which of the following statements are true for a typical firm in this market given the transition from monopolistic competition to perfect competition? Check all that apply. Marginal cost decreases. Profit remains unchanged. Average total cost remains unchanged. The price decreases. The quantity decreases.
9. Perfect Competition The market for peanut butter in Nutville is monopolistically competitive and in long-run equilibrium. The following graph shows the marginal-cost (MC) curve and the average-total-cost (ATC) curve for a peanut-butter-producing firm. It also shows the demand curve and marginal-revenue (MR) curve faced by a firm operating in a monopolistically competitive environment. On the following graph, use the black point (plus symbol) to show the profit-maximizing output and price for a typical firm operating in a monopolistically competitive environment. Price, Cost, Revenue Demand MC- ATC MR Quantity + Profit Max Under MC Perfect Comp. Outcome One day, consumer advocate Skippy Jif discovers that all brands of peanut butter in Nutville are identical. Thereafter, the market becomes perfectly competitive and again reaches its long-run equilibrium. On the previous graph, use the grey point (star symbol) to show the market price in this case and the quantity produced by each firm. Which of the following statements are true for a typical firm in this market given the transition from monopolistic competition to perfect competition? Check all that apply. Marginal cost decreases. Profit remains unchanged. Average total cost remains unchanged. The price decreases. The quantity decreases.
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter10: Monopolistic Competition And Oligopoly
Section: Chapter Questions
Problem 4QFR
Related questions
Question
Transcribed Image Text:9. Perfect Competition
The market for peanut butter in Nutville is monopolistically competitive and in long-run equilibrium.
The following graph shows the marginal-cost (MC) curve and the average-total-cost (ATC) curve for a peanut-butter-producing firm. It also shows the
demand curve and marginal-revenue (MR) curve faced by a firm operating in a monopolistically competitive environment.
On the following graph, use the black point (plus symbol) to show the profit-maximizing output and price for a typical firm operating in a
monopolistically competitive environment.
Price, Cost, Revenue
Demand
MC-
ATC
MR
Quantity
+
Profit Max Under MC
Perfect Comp. Outcome
One day, consumer advocate Skippy Jif discovers that all brands of peanut butter in Nutville are identical. Thereafter, the market becomes perfectly
competitive and again reaches its long-run equilibrium.
On the previous graph, use the grey point (star symbol) to show the market price in this case and the quantity produced by each firm.
Which of the following statements are true for a typical firm in this market given the transition from monopolistic competition to perfect
competition? Check all that apply.
Marginal cost decreases.
Profit remains unchanged.
Average total cost remains unchanged.
The price decreases.
The quantity decreases.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 1 images
Recommended textbooks for you
Principles of Microeconomics (MindTap Course List)
Economics
ISBN:
9781305971493
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Microeconomics (MindTap Course List)
Economics
ISBN:
9781305971493
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Economics, 7th Edition (MindTap Cou…
Economics
ISBN:
9781285165875
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Microeconomics
Economics
ISBN:
9781305156050
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
