Because this market is a monopolistically competitive market, you can tell that it is in long-run equilibrium by the fact that at the optimal quantity for each firm. Furthermore, a monopolistically competitive firm's average total cost in long-run equilibrium is v the minimum average total cost,
Because this market is a monopolistically competitive market, you can tell that it is in long-run equilibrium by the fact that at the optimal quantity for each firm. Furthermore, a monopolistically competitive firm's average total cost in long-run equilibrium is v the minimum average total cost,
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter10: Monopolistic Competition And Oligopoly
Section: Chapter Questions
Problem 11PAE
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Transcribed Image Text: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.
100
90
Mon Comp Outcome
80
70
60
Min Unit Cost
50
ATC
40
30
20
MC
MR
Demand
10
20
30
40
50
60
70
80
90
100
QUANTITY (Thousands of engines)
Because this market is a monopolistically competitive market, you can tell that it is in long-run equilibrium by the fact that
at the
optimal quantity for each firm. Furthermore, a monopolistically competitive firm's average total cost in long-run equilibrium is
the
minimum average total cost.
PRICE (Dollars per engine)
10
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