Principles of Microeconomics (MindTap Course List)
8th Edition
ISBN: 9781305971493
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 16.3, Problem 3QQ
To determine
The effects ofadvertising and branding in monopolistic competition .
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Question #5What is the MC=MR Profit Maximization point? What quantity should Delicious Deserts be producing at 'and' what price should they be charging to maximize their profits?
Question #6
Why isn't it a good idea for them to produce and sell as many cakes as they can? Is it more profitable to sell less cakes at this current stage of their business?
Question #7Do you have any other recommendations for Delicious Deserts to increase their revenues, profits, market share, and client retention?
Demand Schedule
Assume MC = 0
Price
Quantity
$24
0
$22
1
$20
2
$18
3
$16
4
$14
5
$12
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$10
7
$8
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$6
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$4
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$2
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$0
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1. If the market is perfectly competitive, what will the market equilibrium price and quantity be in the long-term? Explain how you arrived at that answer.
2. If the market is a duopoly and the firms collude to maximize joint profits, what will market price and quantity be? Explain how you arrived at that answer.
3. If the market is a duopoly and the firms collude to maximize joint profits, what is each firm's total revenue if the firm split the market equally? Explain how you calculated that answer.
2. Now draw a firm operating under perfect competition that is losing money but should still stay open in the short run. (Again, show both the firm and the industry graphs)a. What happens over-time, if many firms are suffering economic losses?b. Is this good or bad for consumers? Explain.
Chapter 16 Solutions
Principles of Microeconomics (MindTap Course List)
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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- Explain in words why a profit-maximizing film will not choose to produce at a quantity where marginal cost exceeds marginal revenue.arrow_forwardYour company operates in a perfectly competitive market. You have been told that advertising can help you increase your sales in the short run. Would you create an aggressive advertising campaign for your product?arrow_forwardWhat prevents a perfectly competitive firm from seeking higher profits by increasing the price that it charges?arrow_forward
- Since a perfectly competitive firm can sell as much as it wishes at the market price, why can the firm not simply increase its profits by selling an extremely high quantity?arrow_forwardHow does a perfectly competitive firm decide what price to charge?arrow_forward2) Why is the demand curve facing a firm in an imperfectly competitive industry downward sloping? What are TWO marketing strategies available for a firm in this industry? Explain. Use graphs to explain your answer.arrow_forward
- Your company operates in a perfectly competitive market. You have been told that advertising can help you increase your sales in the short run. Would you create an aggressive advertising campaign for your product? in a paragraph explain Why or Why not?arrow_forwardRebecca owns Louisiana Sugar Company, a manufacturer of sugar. Since there are lots of domestic manufacturers and importers of sugar and it is difficult to practice brand differentiation, the sugar industry is highly competitive. Suppose the demand for sugar increases. (1) What will be the effect on the market price and quantity of sugar in the short run and in the long run? Explain why. (2) What will happen to the economic profits of Louisiana Sugar Company in the short run and in the long run? Explain why.arrow_forward(a) What are the characteristics of a perfectly competitive market?(b) What are the characteristics of a monopoly market?(c) What are the characteristics of a monopolistically competitive market?(d) What are the characteristics of a oligopoly market?(e) What is the difference between a monopoly and a monopsony? What happens when they meet?Explain.arrow_forward
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