ΣB.2010503020PRICE (Dollars per bat)Homework (C(91.4. Is monopolistic competition efficient?Suppose that a firm produces baseball bats 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.06Mon Comp OutcomeMin Unit CAst094010MRDemandpleuwe0906QUANTITY (Thousands of bats)Because this market is a monopolistically competitive market, you can tell that it is in long-run equilibrium by the fact that▼ at the optimaleticallthe miairMacBook ProACID&5.RHNcommandcomm # 002010502010PRICE (Dollars per bat)06Mon Comp OutcomeMin Unit Cost09ATC40MRDemand300906QUANTITY (Thousands of bats)at the optimalBecause this market is a monopolistically competitive market, you can tell that it is in long-run equilibrium by the fact thatthe minimumquantity for each firm. Furthermore, a monopolistically competitive firm's average total cost in long-run equilibrium isaverage total cost.True or False: This indicates that there is excess capacity in the market for bats.TrueO FalseMonopolistic competition may also be socially inefficient because there are too many or too few firms in the market. The presence of theexternality implies that there is too little entry of new firms in the market.MacBook Pro>&#3.5.R.commandcommand

Answer: According to the above figure, the market is in equilibrium at point E where the marginal…

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. True or False: This indicates that there is excess capacity in the market for bats. True False onopolistic competition may also be socially inefficient because there are too many or too few firms in the market. The presence of the externality implies that there is too little entry of new firms in the market.

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. True or False: This indicates that there is excess capacity in the market for bats. True False onopolistic competition may also be socially inefficient because there are too many or too few firms in the market. The presence of the externality implies that there is too little entry of new firms in the market.

Principles of Microeconomics (MindTap Course List)

8th Edition

ISBN:9781305971493

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter16: Monopolistic Competition

Section: Chapter Questions

Problem 8PA

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