In the long run,a. monopolistically competitive firms earn a higher profit than perfectly competitive firmsbecause monopolistically competitive firms have some monopoly power.b. monopolistically competitive firms produce a higher output than perfectly competitivefirms because competition drives the perfectly competitive firm's output down.c. both monopolistically competitive and perfectly competitive firms produce where P = MC.d. both monopolistically competitive and perfectly competitive firms produce where P =ATC.

In the LR, there are no fixed inputs, and all inputs can be changed to accommodate changes in the…

Answered: In the long run, a monopolistically…

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter10: Monopolistic Competition And Oligopoly

Section: Chapter Questions

Problem 4QFR

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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?
How do perfectly competitive firms, monopolists, monopolistically competitive firms, and cartels choose the profit -maximizing quantity? A) The quantity at which average total cost is minimizedB) The quantity at which total revenue and total cost are equalC) The quantity at which total revenue is maximizedD) The quantity at which marginal revenue and marginal cost are equal
a) Can the threat of a price war deter entry by potential competitors? What actions might a firm take to make this threat credible? b)Why is the firm’s demand curve flatter than the total market demand curve in monopolistic competition? Suppose a monopolistically competitive firm is making a profit in the short run. What will happen to its demand curve in the long run?
A. How does the demand curve faced by the firm in monopolistically competitive market differ from the demand curve faced by a firm participating in a purely competitive market? b. How does that impact how the firm sets its price and the quantity the firm produces?
Suppose the monopolistically competitive barber shop industry in a community is in long-run equilibrium, and that the typical price is $20 per haircut. Moreover, the population is rising. 1. Illustrate the short-run effects of a change on the price and output of a typical firm in the market. 2. Show what happens in the long run. Will the final price be higher than $20? Equal $20? Be less than $20? Assume that nothing happens to the cost of producing haircuts. 3. Suppose that, initially, the price of a typical children’s haircut is $10. Do you think this represents price discrimination? Why or why not?
The American market for shoes is a good example of monopolistic competition. In a situation where Adidas is earning a large economic profit in the short-run, Nikemay try to increase their advertising to capture some of that business, If Nike is successful in their campaign, what would happen to the demand curve for Adidas and the price at which they can sell?O a. The demand curve shifts up and to the right, and the price rises.O b. The demand curve shifts up and to the right, and the price falls.O c. The demand curve shifts down and to the left, and the price walls.O d. The demand curve shifts down and to the left, and the price rises.Oe. Nike cannot affect the demand for Adidas since this is a monopolistically competitive market.
Consider a monopolistically competitive industry where firms differ in productivity levels. When the industry opens to international trade, transportation and other transaction costs may determine which firms will remain exclusively in the local market and which firms will become exporters.a) True or False?b) Explain with the support of a graph.
I need help with number 1 because I have no clue which one is correct. I need some sort of explanation 1. Which of the following is true of the model of monopolistic competition? a. Barriers to entry enable firms to enjoy positive profits in the long run. b. The number of firms declines over time as a result of economies of scale. c. The monopolistically competitive firms enjoy a greater market power than a monopolist. d. Firms tend to locate near each other in order to minimize total travel costs for consumers. e. The firms end up charging same prices for their individual products. 2. Which of the following is an example of price competition? a. Nike signs LeBron James to a $90 million contract for endorsements. b. Kellogg's puts the images of Snap, Crackle, and Pop on boxes of Cocoa Krispies, linking the cereal with Rice Krispies. c. McDonald's introduces new garden McSalads. d.…
How is monopolistic competition like monopoly, perfect competition and oligopoly? Give two examples of price discrimination. In each case, explain why the monopolist chooses to follow this business strategy Why does price equal marginal revenue for the perfectly competitive firm? What is the relationship to the demand curve for the firm?
(a) Does a monopolistically competitive firm have an incentive to produce at the level of output that minimizes the average total cost at the long run equilibrium? Explain with a diagram. (b) Suppose CLP Holdings Limited is a natural monopolist with constant marginal cost. Draw a diagram to indicate the profit-maximizing level of output, the profit-maximizing price, and the size of the profit. If the government wants to increase the market efficiency through price regulation, would you suggest the government setting the price equal to the firm’s marginal cost or its average total cost? Explain in detail with the diagram in part (i).
Explain the profit-maximizing output leveland profitof a monopolistic firm by drawing a graph. What are the advantages of internal economies of scale? Explain them briefly. What is the meaning of ‘acceptable loss’for a perfectly competitive firm ? Draw a graph and explain. How can we increase the Total Revenue of productsby using elasticity? Explain them briefly.

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