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- Exercise A.13. Explain and graph the long-run equilibrium of a monopolistic firm and that of a perfectly competitive firm. Compare both situations in terms of the level of production, prices and economic efficiency.The graph shows the demand curve and marginal revenue curve of Java Time, Inc., a producer of espresso machines in monopolistic competition. Draw the firm's marginal cost curve if Java Time produces 125 espresso machines a week. Label it Draw a point at the profit-maximizing quantity and price. if average total cost at the profit-maximizing quantity is $100 a machine, what is Java Time's economic profit? Java Time's economic pro t is $ Selected: none ON 804 604 0 Price and cost (dollars per machine) 25 50 75 100 125 150 1175 200 225 250 2 Quantity (espresso machines per week) >>> Draw only the objects specified in the question ate Clear ?Please dont copy and paste the answers One of your former peers starts up a firm after graduating NYUAD. However, he didn’t take Markets so is unsure if he is behaving optimally. He’s asked you for help. His firm faces monopolistic competition, has diminishing returns to its inputs and uses a fixed input. He is producing at a quantity such that P=MC, and he makes a positive profit. a. Draw the Demand curve, MR, MC, and ATC reflecting this situation on a graph. Label the quantity, price and profit of the firm under his strategy. b. Is his strategy maximizing his profits? Explain how he would do so if not. Label the quantity, price and profit of the firm under the optimal strategy on your graph in part a. c. He asks you about what you predict might happen to his profits in the future. What do you expect will happen to profits in this industry as we go to long run and why? What is the key assumption of monopolistic competition that gives you your conclusion?
- How does the demand curve for a monopolistic competitive firm looks like? Graph it.The following graph characterizes a firm in a monopolistically competitive market. 32 24 18 16 12 8- ATC This show that the firm is 12 MC earing zero economic profits. producing 16 units of the good. in a long run equilibrium. in a short run position. MR 16 20 24 Demand 28 32 QThe table below shows data for the production of Avocados for an individual firm operating in a monopolistic competition. a. What is the profit maximizing quantity? Quantity of Avocados Price Total Costs 100 550 48,500 200 500 93,500 300 450 143,500 400 400 198,500 500 350 258,500 600 300 323,500
- Suppose the accompanying graph depicts a monopolistically competitive firm earning positive economic profits. Please shift the асс curves to show the effects of long-run competition and then place Point A at the price and quantity at which the firm will produce in the long-run. MC АТС MR D A Quantity Price and CostPrice, cost, revenue $100 $90 $80 $70 $60 $50 0 000 MR MC D /AC 0 7000 14000 21000 12000 Dresses per year Refer to the graph shown of a monopolistically competitive firm. In the long run: marginal cost will fall for firms that remain as other firms exit the industry. demand will fall for firms that remain as other firms enter the industry. Odemand will rise for firms that remain as other firms exit the industry. O average total cost will rise for firms that remain as other firms enter the industry.The graph shows the demand curve, marginal revenue curve, and marginal cost curve of Java Time, Inc., a producer of espresso machines in monopolistic competition. Draw a point at the firm's the profit-maximizing price and quantity. Label it 1. Draw an arrow that shows Java Time's markup. Draw the average total cost curve such that Java Time does not have excess capacity. Label it. Draw a point at the intersection of the ATC curve and the MC curve. Label it 2. Java Time's markup is $a machine. 240 220- 200- 180- 160- 140 120- 100- 80- 60- 40- 20- 04 0 Price and cost (dollars per machine) MC 100 200 300 400 Quantity (espresso machines per week) D MR 500
- Play The following graphs show two firms operating in a monopolistically competitive market. The firm illustrated in Graph A will experience a Figure 9.2: Price Select one: MC MR 91 92 Quantity Graph A Ob. loss; of 41 OC. profit, of q Od. profit of q e. loss, of q a. profit, between q, and q ATC D Price MC MR 91 92 Quantity Graph B ATC at a quantityUse the graph to answer the question that follows. MC ATC Quantity The graph represents a firm in monopolistic competition. Which of the following statements about the firm's price is accurate? The price is set at the intersection of MR and MC. The price is set at the intersection of MC and D. The price is set at the intersection of ATC and MC. The price is set at the intersection of ATC and D. The price is set on the ATC above the intersection of MC and D.Marginal revenue and marginal cost intersect at point Multiple Choice C. d. a. b.