All of the following are characteristics of long-run equilibrium for firms in a monopolistically competitive market except: A. price equals marginal cost. B. price equals average total cost. C. price exceeds the minimum of average total cost. D. marginal cost equals marginal revenue
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All of the following are characteristics of long-run equilibrium for firms in a
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- What is the first item to identify when determining the short-run equilibrium for a monopolistically competitive firm? a. the total profits b. the total revenue C. the total costs d. the profit-maximizing level of outputWhich of the following statements is correct? a. In the long run, both perfectly competitive firms and monopolistically competitive firms operate with excess capacity. b. A firm operates with excess capacity when, in the long run, its level of output is below the efficient scale. c. For any firm, efficient scale is the level of output at which the average-total-cost curve is tangent to the demand curve. d. All of the above are correct.II. The figure is drawn for a monopolistically competitive firm. PRICE 140 123.33 90 56.67 100 133.33 QUANTITY MC ATC Demand MR Refer to the figure above and explain: A). In order to maximize its profit, how many units the firm will choose to produce? 100 B). When the firm is maximizing its profit, the markup over marginal cost amounts to 50 C). The firm's maximum profit is D). Efficient scale is reached beyond which level of units? 133.33
- #3) Draw a diagram of the long run equilibrium in a monopolistically competitive market. How is price related to average total cost? How is price related to marginal cost?The graph below summarizes the demand and costs for a firm that operates in a monopolistically competitive market.Instruction: Use the nearest whole numbers on the graph when calculating numerical responses below.a. What is the firm’s optimal output? unitsb. What is the firm’s optimal price?$ c. What are the firm’s maximum profits?$ d. What adjustments should the manager be anticipating?multiple choice Demand will decrease over time as new firms enter the market. Demand will increase over time as firms exit the market. Demand will remain unchanged over time.(a) Explain the adjustment process of a monopolistically competitive firm transitioning from the short-run to the long-run. (b) Explain what is meant by the ‘advertising trap’ for a monopolistically competitive firm.
- If a firm is operating in a monopolistically competitive market, then in the long run: A. the firm will maximize its profit by producing the output level at which the marginal revenue is minimized. B. the firm will earn zero economic profit. C. the firm will maximize its profit by producing the output level at which the average cost is minimized. D. all of the abovePart a of question attached b) To achieve productive efficiency, this firm would need to produce ______ units? c) To achieve allocative efficiency, the firm would produce ______ and charge a price of ______ d) Is a monopolistically competitive outcome productively efficient? Is it allocatively efficient?Monopolistically competitive firms use product differentiation to a.limit the number of firms in the industry. b.ensure long-run profits. c.achieve market power. d.block other firms from entering the industry.
- 3. You are hired as a consultant to a monopolistically competitive firm. The firm reports the following information about its price, marginal cost, and average total cost. Can the firm possibly be maximizing profit? If not, what should it do to increase profit? If the firm is maximizing profit, is the market in a long-run equilibrium? If not, what will happen to restore long-run equilibrium? a. P < MC, P > ATC b. P > MC, P < ATC c. P = MC, P > ATC d. P > MC, P = ATCAssume a monopolistically competitive firm encounters a decrease in average variable cost at all output levels.We would expect: a. The price to rise and output to rise b. The price to fall and output to fall c. The price to rise and output to fall d. The price to fall and output to riseWhich of the following is true of a monopolistically competitive firm in long-run equilibrium? Group of answer choices a. It produces where price equals marginal cost, and it earns zero economic profits. b. It produces where marginal cost equals marginal revenue, and the price is equal to average total cost. c. It produces at the minimum average total cost, and it utilizes all excess capacity. d. It produces where marginal revenue exceeds marginal cost, and it earns positive economic profits. e. It produces more than the allocatively efficient quantity, and the price is greater than marginal cost.