MANAGERIAL/ECON+BUS/STR CONNECT ACCESS
9th Edition
ISBN: 2810022149537
Author: Baye
Publisher: MCG
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Chapter 9, Problem 24PAA
To determine
Whether the given example refutes or support the characterization of airline industry.
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Citrus Scooters is a company that manufactures electric scooters in a monopolistically competitive market. The following graph shows the demand
curve, marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC) for Citrus.
Place the black point (plus symbol) on the graph to indicate the short-run profit-maximizing price and quantity for this monopolistically competitive
company. Then, use the green rectangle (triangle symbols) to shade the area representing the company's profit or loss.
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500
ATC
300
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200
MC
MR
PRICE (Dollars per scooter)
PRICE (Dollars per scooter)
450
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350
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100
50
0
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200 250 300 350 400 450 500
QUANTITY (Scooters)
Given the profit-maximizing choice of output and price, Citrus Scooters is earning 2
3
Now consider the long run in which scooter manufacturers are free to enter and exit the market.
50 100
150
Demand
QUANTITY (Scooters)
sellers in the industry relative to the long-run equilibrium amount.
Monopolistically…
Citrus Scooters is a company that manufactures electric scooters in a monopolistically competitive market. The following graph shows the demand
curve, marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC) for Citrus.
Place the black point (plus symbol) on the graph to indicate the short-run profit-maximizing price and quantity for this monopolistically competitive
company. Then, use the green rectangle (triangle symbols) to shade the area representing the company's profit or loss.
PRICE (Dollars per scooter)
500
450
400
350
300
250
200
150
100
50
Co
0
0
"MC
50
100
ATC
MR
Demand
150 200 250 300 350 400 450 500
QUANTITY (Scooters)
Monopolistically Competitive Outcome
Profit or Loss
Citrus Scooters is a company that manufactures electric scooters in a monopolistically competitive market. The following graph shows the demand
curve, marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC) for Citrus.
Place the black point (plus symbol) on the graph to indicate the short-run profit-maximizing price and quantity for this monopolistically competitive
company. Then, use the green rectangle (triangle symbols) to shade the area representing the company's profit or loss.
PRICE (Dollars per scooter)
500
450
400
350
300
ATC
250
200
150
100
50
MC
0
0 50 100
MR
Demand
150 200 250 300 350 400 450 500
QUANTITY (Scooters)
Monopolistically Competitive Outcome
Profit or Loss
Given the profit-maximizing choice of output and price, Citrus Scooters is earning
sellers in the industry relative to the long-run equilibrium amount.
?
profit, which means there are
Chapter 9 Solutions
MANAGERIAL/ECON+BUS/STR CONNECT ACCESS
Ch. 9 - Prob. 1CACQCh. 9 - Prob. 2CACQCh. 9 - Prob. 3CACQCh. 9 - Prob. 4CACQCh. 9 - Prob. 5CACQCh. 9 - Prob. 6CACQCh. 9 - Prob. 7CACQCh. 9 - Prob. 8CACQCh. 9 - Prob. 9CACQCh. 9 - Prob. 10CACQ
Ch. 9 - Prob. 11PAACh. 9 - Prob. 12PAACh. 9 - Prob. 13PAACh. 9 - Prob. 14PAACh. 9 - The opening statement on the website of the...Ch. 9 - Prob. 16PAACh. 9 - Prob. 17PAACh. 9 - Prob. 18PAACh. 9 - Prob. 19PAACh. 9 - Prob. 20PAACh. 9 - Prob. 21PAACh. 9 - Prob. 22PAACh. 9 - Prob. 23PAACh. 9 - Prob. 24PAA
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