Is the statement Price is equal to average total cost true for a monopolistically competitive firm and a perfectly competitive firm in the long-run equilibrium and why?
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- The demand function for a monopolistically competitive firm's product is Q = 100 – 4P, while the firm's cost function is C = 500 + 10Q + 0.5Q2.(a) Determine the firm's equilibrium price and quantity.(b) Is the firm in long-run equilibrium? If not, what is expected to happen in the long run if the firm remains in the industry?Which of the following statements is correct? a. In the long run, both perfectly competitive firms and monopolistically competitive firms operate with excess capacity. b. A firm operates with excess capacity when, in the long run, its level of output is below the efficient scale. c. For any firm, efficient scale is the level of output at which the average-total-cost curve is tangent to the demand curve. d. All of the above are correct.The demand and total cost functions for a monopolistically competitive market are: Q(P) = 300/N – P, where N = number of firms TC(Q) = 50 + Q2 There are currently three firms in this market and they are in a short run equilibrium. c) In the long run, how many firms are in the market (round to the nearest integer)?
- You are the manager of a monopolistically competitive firm, and your demand and cost functions are given by Q = 36 − 4P and C(Q) = 4 + 4Q + Q2a. Find the inverse demand function for your firm’s product. b. Determine the profit-maximizing price and level of production. c. Calculate your firm’s maximum profits. d. What long-run adjustments should you expect? ExplainExplain how either economic profit or loss minimization could be representative of the short-run profitability realized by firms within a monopolistically competitive market, but breakeven or normal profit, represents the definitive long-run profitability that will come to exist for the firms operating in that market.A firm in monopolistic competition produces an output level Q1 = 100 where marginal revenue is equal to marginal cost. At this output level, the price is P1 = $75 and the average total cost is ATC1 = $25. Draw the graph for the monopolistically competitive firm in the short-run equilibrium using the numbers provided above (include ATC, D, MC, and MR curves). Label everything! On the graph, show the markup and the excess capacity for this firm. Draw the graph for the monopolistically competitive firm in long-run equilibrium
- A firm in monopolistic competition produces an output level Q1 = 100 where marginal revenue is equal to marginal cost. At this output level, the price is P1 = $75 and the average total cost is ATC1 = $25. 1. Draw the graph for the monopolistically competitive firm in the short-run equilibrium using the numbers provided above (include ATC, D, MC, and MR curves). Label everything! 2. At this output of Q1 = 100, calculate: total revenue (TR), total cost (TC), and profit in the short-run. Show your work (formulas and calculations). 3. On the graph, show the markup and the excess capacity for this firm. 4. In the long run, what will happen to the profit earned by the firm? 5. Draw the graph for the monopolistically competitive firm in long-run equilibrium.You are the manager of a monopolistically competitive firm, and your demand and cost functions are estimated as Q = 36 − 4P and C(Q) = 4 + 4Q + Q2. a. Find the inverse demand function for your firm’s product. P =____ −_____ Q b. Determine the profit-maximizing price and level of production. Instruction: Price should be rounded to the nearest penny (two decimal places). Price: $_____ Quantity:_____ c. Calculate your firm’s maximum profits. Instruction: Your response should appear to the nearest penny (two decimal places). $______ d. What long-run adjustments should you expect? Explain. multiple choice A. Entry will occur until profits are zero. B. Neither entry nor exit will occur. C. Exit will occur until profits rise sufficiently high.You are the manager of a monopolistically competitive firm, and your demand and cost functions are given by Q= 36 - 4P and C(Q)=4+4Q+Q^2. What long-run adjustments should you expect? Explain. What is the value of the consumer surplus (under monopoly)? Calculate the deadweight loss (under monopoly). What is the value of the Lerner Index? Explain what this number means.
- Rochelle is the manager of a firm that sells its product in a monopolistically competitive market with (inverse) demand given by P = 40 − 0.5Q. The firm's cost function can be represented by C(Q) = 40 + 5Q2. What is the firm’s marginal revenue? Multiple Choice MR = 40 − 0.5Q. MR = 40 − Q. MR = 80 − 0.5Q. MR = 80 − Q.You are the manager of a monopolistically competitive firm, and your demand and cost functions are given by Q = 36 – 4P and C(Q) = 4 + 4Q + Q2. a. Find the inverse demand function for your firm’s product. b. Determine the profit-maximizing price and level of production. c. Calculate your firm’s maximum profits. d. What long-term adjustments should you expect? Explain.Suppose a monopolistically competitive firm is in long-run equilibrium. The firm's demand curve is tangent to its average cost curve at Q = 25. Average cost is minimized at Q = 35, where average cost is $50. Which of the following is true? Group of answer choices This firm maximizes profit at an output level of 35 units. This firm maximizes profit at an output level lower than 25 units. This firm maximizes profit at an output level of 25 units. This firm incurs an economic loss in the long run. This firm maximizes profit at an output level greater than 35 units.