In monopolistic competition equilibrium with symmetric fırms, firms enteruntil each firm earnsO zero economic profits because price equals average cot.O positive monopoly profits because it sells a differentiated product.O positive economic profits only if it engages in international tradeO negative economic profits because of fixed costs.

Answer: In monopolistic competition with symmetric firms if the firms earn positive economic profit…

In monopolistic competition equilibrium with symmetric firms, firms enter until each firm earns O zero economic profits because price equals average cost. positive monopoly profits because it sells a differentiated product. O positive economic profits only if it engages in international trade. negative economic profits because of fixed costs.

In monopolistic competition equilibrium with symmetric firms, firms enter until each firm earns O zero economic profits because price equals average cost. positive monopoly profits because it sells a differentiated product. O positive economic profits only if it engages in international trade. negative economic profits because of fixed costs.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter14: Monopolistic Competition And Product Differentiation

Section: Chapter Questions

Problem 10P

See similar textbooks

Similar questions

If the firms in a monopolistically competitive market are earning economic profits or losses in the short run, would you expect them to continue doing so in the long run? Why?
Continuing with the scenario in question 1, in the long run, the positive economic profits that the monopolistic competitor earns will attract a response either from existing firms in the industry or film outside. As those films capture the original films profit, what will happen to the original films profit-maximizing price and output levels?
When OPEC raised the price of oil dramatically in the mid-1970s, experts said it was unlikely that the cartel could stay together over the long term-that the incentives for individual members. to cheat would become too strong. More than fort),r years later, OPEC still exists. Why do you think OPEC has been able to beat the odds and continue to collude? Hint: You may wish to consider non-economic reasons.
What is the relationship between product differentiation and monopolistic competition?
Aside from advertising, how can monopolistically competitive films increase demand for their products?
Make a case for why monopolistically competitive industries never reach long-run equilibrium.
There is much evidence that large firms with considerable market power (firms such asmonopolies) may not maximize profits but may pursue quite different objectives such asgrowth or sales revenue maximization. What are the arguments put forward to defendmonopoly? Name any 5 Generally, the aim of a business is to maximize profit. Which point should a firm operateat in order to achieve maximum profit? By making use of a graph indicate clearly the pointat which a firm makes maximum profit and a point where a firm increase their output inorder to enhance profit as well as well as the points where they should reduce theirproduction if they want to enhance profit