Monopolistic competition is like perfect competition in that firms in b market structures do which of the following? O Advertise to increase demand for their product.s O Produce output where price equal to average total cost in the long run. O Maximize profit by selecting output level where price is equal to marginal co O Produce goods that are perfect substitutes.

Monopolistic competition is like perfect competition in that firms in b market structures do which of the following? O Advertise to increase demand for their product.s O Produce output where price equal to average total cost in the long run. O Maximize profit by selecting output level where price is equal to marginal co O Produce goods that are perfect substitutes.

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter10: Monopolistic Competition And Oligopoly

Section: Chapter Questions

Problem 11PAE

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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?
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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.
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