Tools MC Productive eff Profit maximiz ATC Allocative effi Demand MR Quantity b. In which of these three situations is the highest output level produced? O Profit maximization O Productive efficiency O Allocative efficiency Price and costs
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- Consider the diagram below depicting the demand and cost conditions faced by a monopolistically competitive firm. a. Use the graph to show how price and output will vary depending upon which point the firm produces. Indicate the levels that will be produced under profit maximization, productive efficiency, and allocative efficiency. Instructions: (1) Use the tool provided 'Profit maximizing' to plot a point showing the price-quantity combination when the firm is maximizing profit. (2) Use the tool provided 'Productive efficiency' to plot a point showing the price-quantity combination when the firm is producing the productively efficient output level. (3) Use the tool provided 'Allocative efficiency' to plot a point showing the price-quantity combination when the firm is producing the allocatively efficient output level. Tools MC Produ eff Profit maximiz ATC Allocative effi Demand MR Quantity b. In which of these three situations is the highest output level produced? O Profit…Price and costs Consider the diagram below depicting the demand and cost conditions faced by a monopolistically competitive firm. a. Use the graph to show how price and output will vary depending upon which point the firm produces. Indicate the levels that will be produced under profit maximization, productive efficiency, and allocative efficiency. Instructions: (1) Use the tool provided 'Profit maximizing' to plot a point showing the price-quantity combination when the firm is maximizing profit. (2) Use the tool provided 'Productive efficiency' to plot a point showing the price-quantity combination when the firm is producing the productively efficient output level. (3) Use the tool provided 'Allocative efficiency' to plot a point showing the price-quantity combination when the firm is producing the allocatively efficient output level. Demand MR Quantity MC Tools -9 --i Productive eff Profit maximiz ATC Allocative effi. Competitors in monopolistic competition have full control over- (A) The price of their product (B) Product quality (C) The shape of the market demand curve (D) The elasticity of product substitutions 8AM
- #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?K Suppose the figure to the right represents the market for a particular brand of shampoo, such as L'Oreal, Lancome, or Maybelline. Assume the market is monopolistically competitive. What is the firm's profit-maximizing price and quantity? thousand per bottle. (Enter your The monopolistically competitive firm's profit-maximizing quantity is bottles of shampoo, and its profit-maximizing price is $ responses as integers.) Price and cost (per bottle) ♫ 3.00- MC 2.80- ATC 2.60- 2.40- 2.20- 2.00- 1.80- 1.60- 1.40- 1.20- 1.00- 0.80- 0.60- 0.40- 0.20- 0.00+ 0 MR 2 4 6 8 10 12 14 16 18 20 22 24 Quantity (shampoo bottles in thousands)Study Tools ins ess Tips ss Tips PRICE (Dellars per engine) 288 RSS #RR 100 50 30 20 10 MO 0 0 10 ATC MR Demand 20 30 40 50 70 DO 90 QUANTITY (Thousands of engines) 100 Mon Comp Outcome Min Unt Cost Decause this market is a monopolistically competitive market, you can tell that it is in long-run equilibrum by the fact that optimal quantity. Furthermore, a monopolistically competitive firm's average total cost in long-run equilibrium is average total cost. at the the minimum
- The folowing diagram shows the curves for perceived demand, marginal revenue, and cost for Manuela's Pizza, which serves Mexican-style pizza. Manuela's is one of many other fast food restaurants in this town. MC Price and Cost ATC Demand Quantity of piezas Which statement describes the transibon to the long nun? Select the best answer. O More fast food restaurants will enter the market, and Manuela's demand curve will become more elastic. Manuela's will raise its prices since there is a large demand for its pizzas. O More fast food restaurants will enter the market, and Manuela's demand curve will become more inelastic. Manuela's will experience lower costs of production because it will expand its output.23 cements nents sions us es les eButton millan Learning borations m gle Drive rse Materials Answer the questions based on the following graph that shows the cost and revenue curves of a monopolistically competitive firm operating in the Toy Bear industry. 10 9 8 7 6 S 5 4 3 2 1 0 0 1 2 3 A MR 4 5 Quantity 6 7 MC ATC Demand 8 9 10 (a) Is the firm whose cost and revenue curves shown above in short-run equilibrium? Explain. (b) Using the labeling from the graph, identify each of the following at the profit-maximizing output. (i) The average total cost (ii) The output produced (c) Using the labeling from the graph, identify each of the following if this were a profit- maximizing perfectly competitive firm. (i) The average total cost Time Attem 59 MAssume 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 rise
- Monopolistic Competition a. Graphically represent a monopolistically competitive firm, using the curves that would provide information such as the profit maximizing price and quantity as well as the cost at the profit maximizing quantity. b. Show the profit maximizing price and quantity for this firm at a price of $185 and a quantity of 7500. c. Show this firm earning a profit of $45000. Make sure to solve for the numerical value for the average total cost (ATC) at the quantity of 7500. d. As this is a short run scenario, state what will happen to the product price and average costs for this firm as it transitions from the short-run to the long-run.Figure: Monopolistic Competition II Price of a small pizza $12 11 10 ATC MR 10 Number of small pizzas (in hundreds) (Ref 32-9 Figure: Monopolistic Competition III) Use Figure 32-9: Monopolistic Competition III. The figure shbows the demand, marginal revenue, arginal cost, and average total cost curves for Par's Pizza Parlor, a monopolistic competitor in the food-to-go industry. Pat's Pizza Parlor's profit at the profit-maximizing quantity will be: Oa $700. Ob. S0. O. $900. Od. $350.Σ B. 20 10 50 30 20 PRICE (Dollars per bat) Homework (C (91. 4. Is monopolistic competition efficient? Suppose that a firm produces baseball bats 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. 06 Mon Comp Outcome Min Unit CAst 09 40 10 MR Demand pleuwe 09 06 QUANTITY (Thousands of bats) Because this market is a monopolistically competitive market, you can tell that it is in long-run equilibrium by the fact that ▼ at the optimal eticall the miair MacBook Pro ACID & 5. R H N command comm