The figure shows the demand and cost curves for a firm in monopolistic competition. In the long run, the demand for this firm's product will A. decrease as other firms enter the industry. B. become less elastic as firms exit the industry. C. become less elastic as other firms enter the industry. ○ D. decrease as product differences disappear. - Price and costs (dollars per unit) 10 5 5 MR 0 4 8 12 MC ATC D 16 20 24 26 Quantity (units per day)
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- a) True or False and Explain: A profit maximizing monopolist has no limit to how high they set the price. b) True of False and explain: When there are economies of scale in production it is possible for a competitive market to sustain the competitive equilibrium. c) When there are economies of scale in production, why is it beneficial to have only one producer?I need help with number 1, 2, 3, 4 1. Which of the following advertisements provides information to the consumer? a. “CarbChips have half the carbohydrates of regular potato chips”. b. “The Taj Mahal restaurant is like a trip to India”. c. “Brain-power Books – just think it!” d. “Avion Airlines wants to take you higher”. 2. Firms in an Oligopoly produce a quantity of output that is less than the level produced by a perfectly competitive market and charge a price that is greater than the perfectly competitive price. a. True b. False 3. Which of the following is true of the model of monopolistic competition? a. Barriers to entry enable firms to enjoy positive profits in the long run. b. The number of firms declines over time as a result of economies of scale. c. The monopolistically competitive firms enjoy a greater market power than a monopolist. d. Firms tend to locate near each other in order to minimize total travel costs for consumers.…onsider a homogenous good industry with four firms. Total demand is given by D(p)=200-p.The variable (=marginal) cost of each of the firms is c1=10, c2=20, c3=30 and c4=35. Firms compete in prices. Suppose firms 1 and 2 merge into one entity and produce with a marginal cost of 15. Which of the following statements is correct? After the merger, total welfare increases by $500. After the merger, total welfare decreases by $500. After the merger, total welfare increases by $1000. After the merger, total welfare decreases by $1000. None of the above.
- The residents of the town Ectenia all love economics and the mayor proposes building an economics musuem. The musuem has a fixed cost of $2,400,000 and no variable costs. There are 100,000 town residents, and each has the same demand for musuem visits: QD =10-P, where P is the price of admission a. Graph the musuems average-total-cost curve and its marginal cost curve. What kind of market would describe the musuem? b. The mayor proposes financing the musuem with a lump- sum tax of $24 and then opening the musuem to the public for free. How many times would each person visit? Calculate the benefit each person would get from the musuem, measured as consumer surplus minus the new tax. c. The mayor's anti tax opponent says the musuem should finance itself by charging an admission fee. What is the lowest price the musuem can charge without incurring losses? d. For the break even price you found in part (c), Calculate each resident's consumer surplus. Compared with the mayor's plan, who is…A publisher faces the following demand schedule for the next novel from one of itspopular authors:Price Quantity Demanded$ 100 0 novels90 100,00080 200,00070 300,00060 400,00050 500,00040 600,00030 700,00020 800,00010 900,0000 1,000,000The author is paid $2 million to write the book, and the marginal cost of publishingthe book is a constant $10 per book.a. Compute total revenue, total cost, and profit at each quantity. What quantity woulda profit-maximizing publisher choose? What price would it charge?b. Compute marginal revenue. (Recall that MR = ΔTR/ΔQ.) How does marginal revenuecompare to the price? Explain.C. Graph the marginal-revenue, marginal-cost, and demand curves. At what quantitydo the marginal-revenue and marginal-cost curves cross? What does this signify?d. In your graph, shade in the deadweight loss. Explain in words what this means e. If the author were paid $3 million instead of $2 million to write the book, how wouldthis affect the publisher’s decision regarding what…Below we the market demand for a good, and the total cost of producing various levels of quantities by the industry. This problem is a theoretical example of Cournot Competition, where firms choose quantities to produce, and end up selling at whatever price the market is willing to pay for the total industry output. For simplification purposes, firms have no fixed costs, and a constant MC and ATC.a. Complete the table. Quantity Price TR MR TC MC ATC Profit 0 $14 — 0 — — 10 $11 10 20 $8 20 30 $5 30 40 $2 40
- A publisher faces the following demand schedule for the next novel from one of its popular authors:Price Quantity Demanded100 090 100,00080 200,00070 300,00060 400,00050 500,00040 600,000 530 700,00020 800,00010 900,0000 1,000,000The author is paid $2 million to write the book, and the marginal cost of publishing the book is a constant $30 per book.d. In your graph, shade in the deadweight loss. Explain in words what this means. e. If the author was paid $3 million instead of $2 million to write the book, how would this affectthe publisher’s decision regarding the price to charge? Explain. f. Suppose the publisher was not profit-maximizing but was concerned with maximizing economicefficiency. What price would it charge for the book? How much profit would it make at thisprice? (A barrier to entry is ________________. a. none of these. b. freedom to enter and exit. c. illegal in most markets. d. anything that protects a firm from the arrival of new competitors.Assume that the firm in the short run is earning super normal profit. Explain what will happen to these profits in long run for the following markets a) Monopolistic competition b) monopoly
- Market demand is P = 50 -2Q. Firm has cost function TC(Q) = 5 + 2Q + Q^2. Another competitor enters market with identical cost, and theatket can be described as Cournot. What happens to the profit of both firms?Suppose a major insulin manufacturer sells in two markets, the U.S.A. and Mexico. What is the maximum profit that could be attained in Mexico? Group of answer choices $180,000 $365,000 $165,000 $22,500Two firms are engaged in Bertrand competition. There are 10,000 people in the population, each of whom is willing to pay at most 10 for at most one unit of the good. Both firms have a constant marginal cost of 5. Each firm is allocated half the market. It costs a customer s to switch from one firm to the other. Customers know what prices are being charged. Law or custom restricts the firms to charging whole-dollar amounts (e.g., they can charge 6, but not 6.50). a. Suppose that s = 0. What are the Nash equilibria of this model? Why does discrete (whole-dollar) pricing result in more equilibria than continuous pricing? b. Suppose that s = 2. What is (are) the Nash equilibrium (equilibria) of this model? c. Suppose that s = 4. What is (are) the Nash equilibrium (equilibria) of this model? d. Comparing the expected profits in (b) to those in (c), what is the value of raising customers’ switching costs from 2 to 4?.