s monopolistic competition efficient? pose that a firm produces wool jackets in a monopolistically competitive market. The following graph shows its demand curve, marginal revenue ) curve, marginal cost (MC) curve, and average total cost (ATC) curve. e a black point (plus symbol) on the graph to indicate the long-run monopolistically competitive equilibrium price and quantity for this firm. Next, ce a grey point (star symbol) to indicate the minimum average total cost the firm faces and the quantity associated with that cost. (?) 100 70 60 50 X ATC 40 30 MC MR 90 80 20 10 0 70 0 10 20 30 40 50 60 QUANTITY (Thousands of jackets) Demand True 80 90 100 False Mon Comp Outcome ause this market is a monopolistically competitive market, you can tell that it is in long-run equilibrium by the fact that ntity for each firm. Furthermore, the quantity the firm produces in long-run equilibrium is the efficient scale. Min Unit Cost e or False: This indicates that there is excess capacity in the market for jackets. at the optimal opolistic competition may also be socially inefficient because there are too many or too few firms in the market. The presence of the externality implies that there is too little entry of new firms in the market.
s monopolistic competition efficient? pose that a firm produces wool jackets in a monopolistically competitive market. The following graph shows its demand curve, marginal revenue ) curve, marginal cost (MC) curve, and average total cost (ATC) curve. e a black point (plus symbol) on the graph to indicate the long-run monopolistically competitive equilibrium price and quantity for this firm. Next, ce a grey point (star symbol) to indicate the minimum average total cost the firm faces and the quantity associated with that cost. (?) 100 70 60 50 X ATC 40 30 MC MR 90 80 20 10 0 70 0 10 20 30 40 50 60 QUANTITY (Thousands of jackets) Demand True 80 90 100 False Mon Comp Outcome ause this market is a monopolistically competitive market, you can tell that it is in long-run equilibrium by the fact that ntity for each firm. Furthermore, the quantity the firm produces in long-run equilibrium is the efficient scale. Min Unit Cost e or False: This indicates that there is excess capacity in the market for jackets. at the optimal opolistic competition may also be socially inefficient because there are too many or too few firms in the market. The presence of the externality implies that there is too little entry of new firms in the market.
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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Transcribed Image Text:4. Is monopolistic competition efficient?
Suppose that a firm produces wool jackets in a monopolistically competitive market. The following graph shows its demand curve, marginal revenue
(MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve.
Place a black point (plus symbol) on the graph to indicate the long-run monopolistically competitive equilibrium price and quantity for this firm. Next,
place a grey point (star symbol) to indicate the minimum average total cost the firm faces and the quantity associated with that cost.
(?)
PRICE (Dollars per jacket)
100
90
80
70
60
50
30
20
10
0
0
MC
10
True
ATC
MR
20 30 40 50 60 70
QUANTITY (Thousands of jackets)
False
80
Demand
90 100
Mon Comp Outcome
Because this market is a monopolistically competitive market, you can tell that it is in long-run equilibrium by the fact that
quantity for each firm. Furthermore, the quantity the firm produces in long-run equilibrium is
the efficient scale.
Min Unit Cost
True or False: This indicates that there is excess capacity in the market for jackets.
at the optimal
Monopolistic competition may also be socially inefficient because there are too many or too few firms in the market. The presence of the
externality implies that there is too little entry of new firms in the market.
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