Concept explainers
(a)
To find:
Whether soy market is a
Answer to Problem 1P
The soy market is a perfectly competitive market.
Explanation of Solution
Soy market is a perfectly competitive market because there are large number of buyers and sellers, and the firms sells homogeneous product in the soy market.
Monopolistic market refers to the market structure in which there are many firms which sell closely related but differentiated commodities.
Perfectly competitive market:
Perfectly competitive market refers to the market structure in which there are many buyers and sellers. The sellers sell homogeneous commodities in this market structure and there is free entry and exit of firms.
(b)
To find:
Whether retail clothing is a perfectly competitive market.
Answer to Problem 1P
The retail clothing is a monopolistically competitive market.
Explanation of Solution
Retail clothing is a monopolistically competitive market because there are many firms in this market which deal with closely related but differentiated commodities. For example, shirts can be different in color, size, and quality but all are closely related. So, retail clothing is a monopolistically competitive market.
Monopolistically competitive market:
Monopolistic market refers to the market structure in which there are many firms which sell closely related but differentiated commodities.
Perfectly competitive market:
Perfectly competitive market refers to the market structure in which there are many buyers and sellers. The sellers sell homogeneous commodities in this market structure and there is free entry and exit of firms.
(c)
To find:
Whether S restaurant in B Hills is a competitive market.
Answer to Problem 1P
The S restaurant in B Hills is a monopolistically competitive market.
Explanation of Solution
The S restaurant in B Hills is a monopolistically competitive market because there can be many other restaurants in B Hills but not in large number. Since the restaurant deals with closely related but differentiated products. So, this market is termed as monopolistically competitive market.
Monopolistically competitive market:
Monopolistic market refers to the market structure in which there are many firms which sell closely related but differentiated commodities.
Perfectly competitive market:
Perfectly competitive market refers to the market structure in which there are many buyers and sellers. The sellers sell homogeneous commodities in this market structure and there is free entry and exit of firms.
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Chapter 14 Solutions
EBK EXPLORING ECONOMICS
- Westchesser Gloves is a monopolistically competitive firm that sells leather gloves. Use the graph to highlight the area of profit or loss and answer the questions, Price per pair (5) 10 20 Marginal profit or loss: $ Aver co Pairs of gloves (in thousand) Demand 70 80 90 100 Profit or loss Calculate Westchesser's profit or loss at the profit-maximizing price. What will happen to the number of firms in this industry in the long run? Firms will enter this industry, increasing the price at which each firm can sell their gloves until firms begin to earn normal profits. O Firms will exit this industry, increasing the price at which each firm can sell their gloves until firms begin to carn normal profits. O Firms will exit this industry, decreasing the price at which each firm can sell their gloves until firms begin to carn normal profits. O Firms will enter this industry, decreasing the price at which each firm can sell their gloves until firma begin to carn normal profitsarrow_forwardQuestion 19 of 20 > O Macmillan Learning The accompanying graph depicts average total cost (ATC), marginal cost (MC), marginal revenue (M), and demand (D) facing a monopolistically competitive firm. Place point A at the firm's profit maximizing price and quantity. What is the firm's total cost? total cost: $ What is the firm's total revenue? total revenue: $ What is the firm's total profit? profit: $ Price and Cost ($) 50 45 40 35 30 25 20 15 10 5 MR MC ATC D 0 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95100 Quantityarrow_forwardPart II | The graph below shows a monopolistically competitive firm in the short run. Price and Cost 8 9 8 20 0 100 MR 200 300 400 500 600 700 800 Output MC 9. What is the firm's profit-maximizing price and quantity? 10. How much profit does that firm make at that price and quantity? 900 ATC -d-parrow_forward
- Which of the following is an example of a monopolistically competitive industry A. wheat farming B. the local electricity producer C. colleges and universities D. the domestic auto industryarrow_forwarddraw and explain a diagram to show the long run equilibrium in a monopolistically competitive market.how does this equilibrium differ from that in a perfectly competitive market?arrow_forwardWestchesser Gloves is a monopolistically competitive firm that sells leather gloves. a. In the graph below, highlight the area of profit or loss. Price per pair ($) Incorrect 10 9 8 7 3 2 1 0 Average total cost 0 10 20 30 40 50 Pairs of gloves (in thousands) Westchesser's profit/loss: $ Marginal cost 80 Incorrect Demand Marginal revenue 60 70 80 90 100 b. Calculate Westchesser's profit/loss at the profit maximizing price. Profit or lossarrow_forward
- c. Explain why firms operating in monopolistically competitive markets probably will not earn an economic profit in the long runarrow_forwardDraw a diagram depicting a firm that is making a profit in a monopolistically competitive market. Now show what happens to this firm as new firms enter the industry! *(based on the pictures)arrow_forwardDraw a diagram of the long-run equilibrium in a monopolistically competitive market. How is price related to average total cost? How is price related to average total cost? How is price related to marginal cost?arrow_forward
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