EP ECONOMICS,AP EDITION-CONNECT ACCESS
20th Edition
ISBN: 9780021403455
Author: McConnell
Publisher: MCGRAW-HILL HIGHER EDUCATION
expand_more
expand_more
format_list_bulleted
Question
Chapter 13, Problem 3RQ
To determine
Efficiency of monopolistically-competitive firms.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Assuming that the monopolistic competitor faces the demand and costs depicted below and finds the profit maximizing level of output, what will be the firm's profit?
36
32
28
24
20
16
12
8
4
O
O
1
O
MC1
ATC₁
FAVC₁
Select one:
O
a. $8
b. $-32
c. $-64
d. $12 x Incorrect. The profit maximizing output is 4 units where Marginal cost equals marginal revenue. At that output, use the demand curve to find the price and
calculate total revenue. At that output, use the average cost curve to find the average cost and calculate total cost. Then calculate profit = total revenue - total cost.
MR1
D₁
2 3 4 5 6 7 8 9
Consider an oligopolistic market with 5 identical firms that choose their profit-maximizing quantities simultaneously. Suppose each firm has constant
marginal costs of $123 per unit and the market elasticity of demand is - 1.08.
What is the change in the prevailing market price if one additional firm joins the market? Assume that the potential entrant is identical to the incumbent
firms.
O A. -7.71
O B. - 5.51
O C. -9.92
O D. - 6.89
What did Harvard economist Edward Chamberlin say about the observation that a
monopolistically competitive firm's average cost of production exceeds its minimum
average total cost?
Select one:
O a. Chamberlin argued that this belief is incorrect. In his view, monopolistically
competitive firms do not produce at a cost above their minimum average total costs.
O b. Chamberlin argued that these higher costs represent the wastefulness of this
market structure.
O c. In Chamberlin's view, this is evidence that monopolistic competition uses society's
resources inefficiently and in a fashion that merits government intervention.
O d. According to Chamberlin, this cost difference represents the value consumers place
on variety and having more choice.
Chapter 13 Solutions
EP ECONOMICS,AP EDITION-CONNECT ACCESS
Ch. 13.1 - Prob. 1QQCh. 13.1 - Prob. 2QQCh. 13.1 - Prob. 3QQCh. 13.1 - Prob. 4QQCh. 13.4 - Prob. 1QQCh. 13.4 - The D2e segment of the demand curve D2eD1 graph...Ch. 13.4 - Prob. 3QQCh. 13.4 - Prob. 4QQCh. 13.A - Prob. 1ADQCh. 13.A - Prob. 2ADQ
Ch. 13.A - Prob. 3ADQCh. 13.A - Prob. 4ADQCh. 13.A - Prob. 1ARQCh. 13.A - Prob. 2ARQCh. 13.A - Prob. 3ARQCh. 13.A - Prob. 1APCh. 13.A - Prob. 2APCh. 13 - Prob. 1DQCh. 13 - Prob. 2DQCh. 13 - Prob. 3DQCh. 13 - Prob. 4DQCh. 13 - Prob. 5DQCh. 13 - Prob. 6DQCh. 13 - Prob. 7DQCh. 13 - Prob. 8DQCh. 13 - Prob. 9DQCh. 13 - Prob. 10DQCh. 13 - Prob. 11DQCh. 13 - Prob. 12DQCh. 13 - Prob. 13DQCh. 13 - Prob. 1RQCh. 13 - Prob. 2RQCh. 13 - Prob. 3RQCh. 13 - Prob. 4RQCh. 13 - Prob. 5RQCh. 13 - Prob. 6RQCh. 13 - Prob. 7RQCh. 13 - Prob. 8RQCh. 13 - Prob. 1PCh. 13 - Prob. 2PCh. 13 - Prob. 3P
Knowledge Booster
Similar questions
- In the graph for Nike shoes, assume that Nike is selling their shoes in a monopolistically competitive market. At the profit maximizing quantity, the TC of Nike is 100. What is Nike's profit at this quantity? O 150 O 140 0 50 05arrow_forwardRefer to the graph shown of a monopolistically competitive firm. If the firm maximizes profit, it will earn MC 585 $80 $75 $70 $65 A $60 $55 $50 MR $45 $40 o 4 8 12 16 Price WATC 24 20 Dresses per year in thousandsarrow_forward7. Is monopolistic competition efficient? Suppose that a company operates in the monopolistically competitive market for rugby kits. The following graph shows the demand curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve for the firm. 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 (Dolars per 3822ESRR 2 100 70 20 0 MO 6 19 20 ATC MR 30 AS 50 40 70 QUANTITY (Thousands of kits); Demand 8 100 Mon Comp Outcome Min Unit Cost Carrow_forward
- Ma3. You operate in a duopoly in which you and a rival must simultaneously decide what price to charge for the same homogeneous product. Assume each you and your rival can choose a “low price” or a “high price”. If you each charge a low price, you each earn zero profits. If you each charge a high price, you each earn profits of $3 million. If you charge different prices, the one charging the high price loses $5 million and the one charging the low price makes $5 million. What is the Nash equilibrium for the non-repeated version of this game? Now suppose the game is infinitely repeated. If the interest rate is 10%, can you do better than you could in the non-repeated version of this game? If your answer is “yes”, provide the players’ strategies and any other conditions that must hold.arrow_forwardWhat is a feature common to both Monopolistic-Competition and Oligopoly type of markets? O productive efficiency will occur in both the short run and long run, a desirable economic property of markets. many smaller sized firms can produce the good or service at lower cost per unit than larger sized firms, thus large firms fail in the long run. the demand curve for each firm is not going to be purely elastic, because products are at least slightly different than potential rival firms' product and/or there may be some consumer brand loyalty. Firms in both types of markets eventually will be broken up by government anti-trust laws and regulations. MacBook Pro く※ G Search or type URL 6 7 8. 3 4. W Earrow_forward1.Briefly state the basic characteristics of pure competition, pure monopoly, monopolistic competition, and oligopoly. Under which of these market classifications does each of the following most accurately fit? (a) a supermarket in your hometown; (b) the steel industry; (c) a Kansas wheat farm; (d) the commercial bank in which you or your family has an account; (e) the automobile industry. In each case, justify your classification. LO1arrow_forward
- QUESTION 19 Refer to the graph below for a monopolistically competitive firm. Price MC 160 140 ATC 123.33 Demand 90 56.67 MR 100 133.33 154.92 Quantity In the above graph the firm's total revenue at the profit maximization quantity is O $9,000 $16.000 O $14,000 O 55,667arrow_forward3. The following graph summarizes the demand and costs for a firm that operates in a monopolistically competitive market. (LOI, LO3, LOS) $220 210 200 190 180 170 160 150 140 130 120 110 100 90 80 70 60 50 40 30 20 10 0 MR 8 9 10 11 12 13 14 15 16 a. What is the firm's optimal output? b. What is the firm's optimal price? c. What are the firm's maximum profits? d. What adjustments should the manager be anticipating? ATC 22 23 24 25 Quantityarrow_forwardSuppose that a firm produces baseball bats 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. 100 90 Mon Comp Outcome 80 70 60 Min Unit Cost 50 ATC 40 30 20 10 MC MR Demand 10 20 30 40 50 60 70 80 90 100 QUANTITY (Thousands of bats) PRICE (Dollars per bat)arrow_forward
- Rawlding is a manufacturer in the oligopolistically competitive market for footballs. Two other manufacturers, Spaldon and Wilke, compete with Rawlding for football consumers. Rawlding faces the demand curve for footballs depicted on the graph. Initially, Rawlding charges $30 per football, producing and selling 7 million footballs per year. PRICE (Dollars per ball) 36 35 34 33 32 31 30 29 28 27 26 O 7 8 FOOTBALLS (Millions of balls) 9 10 G As an oligopolist, Rawlding is a price maker. If Rawlding raises the price of its football from $30 to $32 per ball, the quantity of Rawlding footballs demanded by million footballs per year. If Rawlding reduces the price of its football from $30 to $28 per ball, the quantity of by million footballs per year. (Hint: Click on the points on the graph to see their coordinates.) footballs demanded If Rawlding raises the price of its football above $30, the kinked demand curve model suggests that Spaldon and Wilke will respond by The portion of Rawlding's…arrow_forwardQuestion 2 [JP.14.3.19] Consider a duopoly where the market demand is described by the equation: P = 150- Q. The marginal cost for each firm is $60. lo.] If the firms compete simultaneously with output, what is each firm's profit-maximizing output, the market quantity, and the price each firm charges? (b.) What is the economic profit eamed by each firm (from question [a]} [c.) If Firm 1 is a leader in output, what is each firm's profit-maximizing output, the market quantity, and the price each firm charges? [d.] What is the economic profit earned by each firm (from question [c])?arrow_forwardQuestion 2 AnimoSpace Support ? Given the perfect competitor firm's supply curve below, what is the shutdown price? P(cost) MC AC 80 AVE 70 60 50 40 30 20 (10,10) 10 10 20 30 40 50 60 70 80 90 100 110 12 Qty Break-even quantity: Shutdown price: O 50 O 70 O 35 IS O 80 O 5 a Question 3 Which of these market structures is not correctly described? Monopolistic Nliaonoly Mononolhe o searcharrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education