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. Because this market is a monopolistically competitive market, you can tell that it is in long-run equilibrium by the fact that at the optimal quantity. Furthermore, the quantity the firm produces in long-run equilibrium is the efficient scale.
Suppose that a firm produces wool jackets in a
Place a black point (plus symbol) on the graph to indicate the long-run monopolistically competitive
Because this market is a monopolistically competitive market, you can tell that it is in long-run equilibrium by the fact that at the optimal quantity. Furthermore, the quantity the firm produces in long-run equilibrium is the efficient scale.
Given:
A firm producing wool jackets in a monopolistically competitive market
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