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If short-run economic profits are greater than zero for firms in a
A. competing firms to enter the market and sell similar products.
B. profits to increase.
C. the
D. entry barriers to prevent competing firms from entering this market.
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- Which of these markets is most likely to be identified as monopolistic competition? Group of answer choices a. shoes b. corn c. gasoline d. shoes, corn and gasoline are all like monopolistic competitionConsider perfect competition and monopolistic competition. In which market structure(s) will we see firms trending toward zero economic profits in the long-run equilibrium? a perfect competition b monopolistic competition c both perfect and monopolistic competition d neitherConsider perfect competition and monopolistic competition. In which market structure(s) will we see price equal to marginal cost at the last unit produced in the long-run equilibrium? a perfect competition b monopolistic competition c both perfect and monopolistic competition d neither
- 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?Evaluate the model of Monopolistic Competition. What are the key assumptions? Do you think this model is useful for explaining many "real world" businesses? Why or why not? How does it compare in this regard to the models of perfect competition and monopoly?3. In the long run, firms operating in perfect competition and monopolistic competition will tend to earn normal profits. True or False? Why?
- Which of the conditions that define perfect competition fail in monopolistically competitive markets? Question 2Answer a. There are many consumers in the market b. Consumers are fully informed c. Firms sell identical products d. There are many firms in the market e. Firms can freely enter and exit the marketQuestion 2 (i) A bicycle manufacturer expects the price of bicycle to rise in the near future, the supplier will ______________________. A: increase the supply of bicycle now B: decrease the supply of bicycle now C: decrease the quantity supplied of bicycle now D: increase the quantity supplied of bicycle now (ii) Red Mountain Coffee Company (RM) is a monopolistic competitive firm. At which of the following quantity should RM produce in order to maximize its profit? A: When marginal cost is equal to average revenue. B: When marginal cost is equal to marginal revenue. C: When the average total cost is equal to average revenue. D: When the average variable cost is equal to marginal revenue.If perfectly competitive firms and monopolistic firms are not commonplace in the United States, why do we study them? Include at least 2 outside sources.
- 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 market for Banh Mi in Auckland CBD consists of 6 restaurants operating in monopolistic competition. Suppose that these firms face monthly fixed costs of $5,000 and marginal costs of $3. a) Draw the average cost and marginal cost curves for a representative firm. b) If the short run market price is $6 and each firm sells 2000 units per month, what will occur in the long run? Explain and show on a graph. c) Suppose that Banh Mi become more popular as a lunch option, and market demand increases. Explain the short run and long run effects on the market, including price, firm-level quantity and number of firms. Use graphs to explain your answer.1. Under the model of monopolistic competition, a(an) ________ in the number of firms in the industry will cause ________ to ________. 2. In the model of monopolistic competition, if the price is ______ than average costs, then firms are earning __________ economic profit and we should expect firms to _________ the industry. 3. In the model of monopolistic competition, if an industry has large ________ relative to another industry, then we should expect _________ firms to operate in a long-run equilibrium of that industry.
