EBK PRINCIPLES OF MICROECONOMICS
7th Edition
ISBN: 8220101472380
Author: Mankiw
Publisher: CENGAGE L
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Question
Chapter 16, Problem 4QR
To determine
The efficient level of output ina monopolistically competitive market .
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When oil prices increased 10 fold during the 1973 – 80 energy crisis, many oil companies made huge profits. During this energy crisis, Congress considered imposing an “excess profits” tax on oil companies. If you were in Congress, would you vote for such a tax? Do unexpected monopolistic profits serve any useful function in a market economy?
what market inefficiencies derive from monopolies and monopolistic competition?
Monopolistic competition creates inefficiency because of the
Price
markups and excess capacity. The graph depicts the situation
$100
for a hypothetical monopolistically competitive firm. The
90
curves included in the graph are demand (D), marginal
80
revenue (MR), average total cost (ATC), and marginal cost
ATC
(MC). Use the graph to find the requested values.
70
60
What is the size of the markup on the price?
50
40
markup: $
30
What is the size of the excess capacity?
20
MC
MR
10
units
excess capacity:
20
30
40
50
60
70
80
90
10
100
Quantity
Chapter 16 Solutions
EBK PRINCIPLES OF MICROECONOMICS
Ch. 16.1 - Prob. 1QQCh. 16.2 - Prob. 2QQCh. 16.3 - Prob. 3QQCh. 16 - Prob. 1CQQCh. 16 - Prob. 2CQQCh. 16 - Prob. 3CQQCh. 16 - Prob. 4CQQCh. 16 - Prob. 5CQQCh. 16 - If advertising makes consumers more loyal to...Ch. 16 - Prob. 1QR
Ch. 16 - Prob. 2QRCh. 16 - Prob. 3QRCh. 16 - Prob. 4QRCh. 16 - How might advertising reduce economic well-being?...Ch. 16 - Prob. 6QRCh. 16 - Prob. 7QRCh. 16 - Prob. 1PACh. 16 - Prob. 2PACh. 16 - Prob. 3PACh. 16 - Prob. 4PACh. 16 - Prob. 5PACh. 16 - Prob. 6PACh. 16 - Prob. 7PACh. 16 - Prob. 8PACh. 16 - Prob. 9PACh. 16 - Sleek Sneakers Co. is one of many firms in the...
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- What do economists mean when they say that competitive markets are more efficient than monopolistic markets? Monopolistic markets result in lower price and higher production Competitive markets result in lower prices, monopolistic market result in higher production Competitive markets result in lower costs, lower prices, and higher levels of production Easy entry and exitarrow_forwardIs monopolistic competition efficient and socially desirable for the welfare of the economyarrow_forward
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