Whether the monopolistically competitive firms produce economic profits because they are protected.

Question

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Answer 1

Question

Chapter 15, Problem 1P

(a)

To determine

Whether the monopolistically competitive firms produce economic profits because they are protected.

(a)

Expert Solution

Answer to Problem 1P

Disagree.

Explanation of Solution

There are many buyers and sellers in the market. The sellers sell differentiated products which means there is competition in the market. However, it is important to note that there are no barriers to entry and exit in monopolistic competition, which means the statement is not agreeable.

Economics Concept Introduction

Monopolistic competition: Monopolistic competition is a type of imperfect competition where many producers produce and sell differentiated products and there is freedom of entry and exit.

(b)

To determine

Whether the monopolistically competitive firms are efficient in the long run.

(b)

Expert Solution

Answer to Problem 1P

Disagree.

Explanation of Solution

There are large number of buyers and sellers, product differentiation as well as freedom of entry and exit into and out of the market under the monopolistic competition. However, it is important to note that the price in the monopolistic competition does not equal the marginal cost either in the short run or in the long run, which means that the monopolistically competitive industry is not efficient in the long run. Thus, the statement is not agreeable.

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Answer 2

Question

Chapter 15, Problem 1P

(a)

To determine

Whether the monopolistically competitive firms produce economic profits because they are protected.

(a)

Expert Solution

Answer to Problem 1P

Disagree.

Explanation of Solution

There are many buyers and sellers in the market. The sellers sell differentiated products which means there is competition in the market. However, it is important to note that there are no barriers to entry and exit in monopolistic competition, which means the statement is not agreeable.

Economics Concept Introduction

Monopolistic competition: Monopolistic competition is a type of imperfect competition where many producers produce and sell differentiated products and there is freedom of entry and exit.

(b)

To determine

Whether the monopolistically competitive firms are efficient in the long run.

(b)

Expert Solution

Answer to Problem 1P

Disagree.

Explanation of Solution

There are large number of buyers and sellers, product differentiation as well as freedom of entry and exit into and out of the market under the monopolistic competition. However, it is important to note that the price in the monopolistic competition does not equal the marginal cost either in the short run or in the long run, which means that the monopolistically competitive industry is not efficient in the long run. Thus, the statement is not agreeable.

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Answer 3

Question

Chapter 15, Problem 1P

(a)

To determine

Whether the monopolistically competitive firms produce economic profits because they are protected.

(a)

Expert Solution

Answer to Problem 1P

Disagree.

Explanation of Solution

There are many buyers and sellers in the market. The sellers sell differentiated products which means there is competition in the market. However, it is important to note that there are no barriers to entry and exit in monopolistic competition, which means the statement is not agreeable.

Economics Concept Introduction

Monopolistic competition: Monopolistic competition is a type of imperfect competition where many producers produce and sell differentiated products and there is freedom of entry and exit.

(b)

To determine

Whether the monopolistically competitive firms are efficient in the long run.

(b)

Expert Solution

Answer to Problem 1P

Disagree.

Explanation of Solution

There are large number of buyers and sellers, product differentiation as well as freedom of entry and exit into and out of the market under the monopolistic competition. However, it is important to note that the price in the monopolistic competition does not equal the marginal cost either in the short run or in the long run, which means that the monopolistically competitive industry is not efficient in the long run. Thus, the statement is not agreeable.

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Answer 4

Question

Chapter 15, Problem 1P

(a)

To determine

Whether the monopolistically competitive firms produce economic profits because they are protected.

(a)

Expert Solution

Answer to Problem 1P

Disagree.

Explanation of Solution

There are many buyers and sellers in the market. The sellers sell differentiated products which means there is competition in the market. However, it is important to note that there are no barriers to entry and exit in monopolistic competition, which means the statement is not agreeable.

Economics Concept Introduction

Monopolistic competition: Monopolistic competition is a type of imperfect competition where many producers produce and sell differentiated products and there is freedom of entry and exit.

(b)

To determine

Whether the monopolistically competitive firms are efficient in the long run.

(b)

Expert Solution

Answer to Problem 1P

Disagree.

Explanation of Solution

There are large number of buyers and sellers, product differentiation as well as freedom of entry and exit into and out of the market under the monopolistic competition. However, it is important to note that the price in the monopolistic competition does not equal the marginal cost either in the short run or in the long run, which means that the monopolistically competitive industry is not efficient in the long run. Thus, the statement is not agreeable.

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Answer 5

Chapter 15, Problem 1P

(a)

To determine

Whether the monopolistically competitive firms produce economic profits because they are protected.

(a)

Expert Solution

Answer to Problem 1P

Disagree.

Explanation of Solution

There are many buyers and sellers in the market. The sellers sell differentiated products which means there is competition in the market. However, it is important to note that there are no barriers to entry and exit in monopolistic competition, which means the statement is not agreeable.

Economics Concept Introduction

Monopolistic competition: Monopolistic competition is a type of imperfect competition where many producers produce and sell differentiated products and there is freedom of entry and exit.

(b)

To determine

Whether the monopolistically competitive firms are efficient in the long run.

(b)

Expert Solution

Answer to Problem 1P

Disagree.

Explanation of Solution

There are large number of buyers and sellers, product differentiation as well as freedom of entry and exit into and out of the market under the monopolistic competition. However, it is important to note that the price in the monopolistic competition does not equal the marginal cost either in the short run or in the long run, which means that the monopolistically competitive industry is not efficient in the long run. Thus, the statement is not agreeable.

Answer 6

Chapter 15, Problem 1P

(a)

To determine

Whether the monopolistically competitive firms produce economic profits because they are protected.

(a)

Expert Solution

Answer to Problem 1P

Disagree.

Explanation of Solution

There are many buyers and sellers in the market. The sellers sell differentiated products which means there is competition in the market. However, it is important to note that there are no barriers to entry and exit in monopolistic competition, which means the statement is not agreeable.

Economics Concept Introduction

Monopolistic competition: Monopolistic competition is a type of imperfect competition where many producers produce and sell differentiated products and there is freedom of entry and exit.

Answer 7

Chapter 15, Problem 1P

(a)

To determine

Whether the monopolistically competitive firms produce economic profits because they are protected.

Answer 8

(a)

Expert Solution

Answer to Problem 1P

Disagree.

Answer 9

(a)

Expert Solution

Answer 10

(a)

Expert Solution

Answer 11

Expert Solution

Answer 12

Explanation of Solution

There are many buyers and sellers in the market. The sellers sell differentiated products which means there is competition in the market. However, it is important to note that there are no barriers to entry and exit in monopolistic competition, which means the statement is not agreeable.

Answer 13

Economics Concept Introduction

Monopolistic competition: Monopolistic competition is a type of imperfect competition where many producers produce and sell differentiated products and there is freedom of entry and exit.

Answer 14

(b)

To determine

Whether the monopolistically competitive firms are efficient in the long run.

(b)

Expert Solution

Answer to Problem 1P

Disagree.

Explanation of Solution

There are large number of buyers and sellers, product differentiation as well as freedom of entry and exit into and out of the market under the monopolistic competition. However, it is important to note that the price in the monopolistic competition does not equal the marginal cost either in the short run or in the long run, which means that the monopolistically competitive industry is not efficient in the long run. Thus, the statement is not agreeable.

Answer 15

(b)

To determine

Whether the monopolistically competitive firms are efficient in the long run.

Answer 16

(b)

Expert Solution

Answer to Problem 1P

Disagree.

Answer 17

(b)

Expert Solution

Answer 18

(b)

Expert Solution

Answer 19

Expert Solution

Answer 20

Explanation of Solution

There are large number of buyers and sellers, product differentiation as well as freedom of entry and exit into and out of the market under the monopolistic competition. However, it is important to note that the price in the monopolistic competition does not equal the marginal cost either in the short run or in the long run, which means that the monopolistically competitive industry is not efficient in the long run. Thus, the statement is not agreeable.