Economics 3. How short-run profit or losses induce entry or exitFantastique Bikes is a company that manufactures bikes in a monopolistically competitive market. The following graph shows Fantastique's demandcurve, marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC).Place the black point (plus symbol) on the graph to indicate the short-run profit-maximizing price and quantity for this monopolistically competitivecompany. Then, use the green rectangle (triangle symbols) to shade the area representing the company's profit or loss.(?)PRICE (Dollars per bike)5004504003503002502001501005000MC50 100MRATCDemand150 200 250 300 350 400 450 500QUANTITY (Bikes)Monopolistically Competitive OutcomeProfit or LossGiven the profit-maximizing choice of output and price, the shop is makingthe long-run equilibrium.shothe indrelatiprofit, which means there areNow consider the long run in which bike manufacturers are free to enter and exit the market.Show the possible effect of this free entry and exit by shifting the demand curve for a typical individual producer of bikes on the following graph. Show the possible effect of this free entry and exit by shifting the demand curve for a typical individual producer of bikes on the following graph.PRICE (Dollars per bike)QUANTITY (Bikes)DemandO Firms can earn positive profit in the long run.Firms are not price takers.DemandWhich of the following statements are true about both monopolistic competition and monopolies? Check all that apply.Price is above marginal cost.Price equals average total cost in the long run.?

Monopolistic competition is one type of market condition where many sellers face the market demand…

Fantastique Bikes is a company that manufactures bikes in a monopolistically competitive market. The following graph shows Fantastique's demand curve, marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC). Place the black point (plus symbol) on the graph to indicate the short-run profit-maximizing price and quantity for this monopolistically competitive company. Then, use the green rectangle (triangle symbols) to shade the area representing the company's profit or loss. (?) PRICE (Dollars per bike) 500 450 400 350 300 250 200 150 100 50 0 0 MC — 50 100 ATC MR Demand 150 200 250 300 300 350 400 450 500 QUANTITY (Bikes) Monopolistically Competitive Outcome Given the profit-maximizing choice of output and price, the shop is making Profit or Loss shops in the industry relative to the long-run equilibrium. profit, which means there are Now consider the long run in which bike manufacturers are free to enter and exit the market. Show the possible effect of this free entry and exit by shifting the demand curve for a typical individual producer of bikes on the following graph.