Suppose that a firm produces polo shirts in a monopolistically competitive market. The following graph shows its demand curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve. Place a black point (plus symbol) on the graph to indicate the long-run monopolistically competitive equilibrium price and quantity for this firm. Ne place a grey point (star symbol) to indicate the minimum average total cost the firm faces and the quantity associated with that cost. PRICE (Dollars per shirt) 100 90 80 40 30 20 10 0 MO 0 10 True ATC MR 20 30 50 60 70 80 90 100 QUANTITY (Thousands of shirts) 40 O False Demand Mon Comp Outcome Because this market is a monopolistically competitive market, you can tell that it is in long-run equilibrium by the fact that optimal quantity for each firm. Furthermore, a monopolistically competitive firm's average total cost in long-run equilibrium is minimum average total cost. Min Unit Cast True or False: This indicates that there is a markup on marginal cost in the market for shirts. at the Monopolistic competition may also be socially inefficient because there are too many or too few firms in the market. The presence of the
Suppose that a firm produces polo shirts in a monopolistically competitive market. The following graph shows its demand curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve. Place a black point (plus symbol) on the graph to indicate the long-run monopolistically competitive equilibrium price and quantity for this firm. Ne place a grey point (star symbol) to indicate the minimum average total cost the firm faces and the quantity associated with that cost. PRICE (Dollars per shirt) 100 90 80 40 30 20 10 0 MO 0 10 True ATC MR 20 30 50 60 70 80 90 100 QUANTITY (Thousands of shirts) 40 O False Demand Mon Comp Outcome Because this market is a monopolistically competitive market, you can tell that it is in long-run equilibrium by the fact that optimal quantity for each firm. Furthermore, a monopolistically competitive firm's average total cost in long-run equilibrium is minimum average total cost. Min Unit Cast True or False: This indicates that there is a markup on marginal cost in the market for shirts. at the Monopolistic competition may also be socially inefficient because there are too many or too few firms in the market. The presence of the
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter10: Monopolistic Competition And Oligopoly
Section: Chapter Questions
Problem 11PAE
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Economics
Transcribed Image Text:Suppose that a firm produces polo shirts in a monopolistically competitive market. The following graph shows its demand curve, marginal revenue
(MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve.
Place a black point (plus symbol) on the graph to indicate the long-run monopolistically competitive equilibrium price and quantity for this firm. Next,
place a grey point (star symbol) to indicate the minimum average total cost the firm faces and the quantity associated with that cost.
PRICE (Dollars per shirt)
100
90
80
70
40
30
20
10
0
MO
0
10
MR
True
ATC
O False
Demand
20 30 40 50 60 70 80 90 100
QUANTITY (Thousands of shirts)
Mon Comp Outcome
Because this market is a monopolistically competitive market, you can tell that it is in long-run equilibrium by the fact that
optimal quantity for each firm. Furthermore, a monopolistically competitive firm's average total cost in long-run equilibrium is
minimum average total cost.
Min Unit Cast
True or False: This indicates that there is a markup on marginal cost in the market for shirts.
at the
Monopolistic competition may also be socially inefficient because there are too many or too few firms in the market. The presence of the
externality implies that there is too much entry of new firms in the market.
the
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