Suppose that total demand for refrigerators at the market price is 15,000 units. If the LRAC curve reaches a clear minimum average cost at 5,000 units, then the industry structure must be Select the correct answer below: O perfectly competitive a monopoly an oligopoly monopolistically competitive
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- The most important factor that drives the long-run profit to zero in monopolistic competition is the elasticity of the market demand curve the elasticity of the firm's demand curve free entry and exit O the reaction of rival firms to a change in price What is one difference between the Cournot and Stackelberg models? O In Cournot, both firms make price decisions simultaneously, and in Stackelberg, one firm sets its price level first O In Stackelberg, both firms make price decisions simultaneously, and in Cournot, one firm sets its price level first O In Cournot, both firms make output decisions simultaneously, and in Stackelberg, one firm sets its output level first O In Stackelberg, both firms make output decisions simultaneously, and in Cournot, one firm sets its output level first O Profits are zero in Cournot and positive in StackelbergSuppose you operate in a monopoly environment and you set your price inorder to achieve maximum prots. Is your demand elastic, unitary elastic, or inelastic? Does your answer change if you were in a monopolistically competitive market? What happens to the elasticity when you go from a monopolistic market to a monopolistically competitive one? Explain and give an example. Retailer companies sell many products for which manufacturers have a sug-gested retail price printed on the package. Is there an economic reason for this price? If you are the manager of a retailing outlet, what factors will determine whether you should charge the suggested retail price or some higher or lower price?at the Because this market is a monopolistically competitive market, you can tell that it is in long-run equihbrium by the fact that the efficient scale. optimal quantity for each firm. Furthermore, the quantity the firm produces n long-run equilibrium is True or False: This indicates that there is a markup on marginal cost in the market for jackets. OTrue False
- QUESTION 1 Press F11 to exit full screen Which firm would earn profit in the long-run? O a monopolist firm. O a monopolistically competitive firm. O an oligopoly firm. O a perfectly competitive firm. QUESTION 2 Refer to the graph below for a monopolistically competitive firm. ↑Price MC 160 140 ATC 123.33 Demand 90 56.67 MR 100 133.33 154.92 Quantity If the above firm chose to produce at 100 units then the firm will be O earning a profit O incurring a loss O there is no profit and no loss O the firm can earn, profit, loss or break evenWhich of the following is a characteristic of monopolistic competition? O few sellers O homogeneous product zero long-run profits O barriers to entry OOCompare the elasticity of the monopolistic competitor’s demand with that of a pure competitor and a pure monopolist. Assuming identical long-run costs, compare graphically the prices and outputs that would result in the long run under pure competition and under monopolistic competition. Contrast the two market structures in terms of productive and allocative effifi ciency. Explain: “Monopolistically competitive industries are characterized by too many firms, each of which produces too little.”
- Consider a monopoly trading firm that dominates a particular market. Describe the factors that contribute to the monopoly's ability to control prices and generate profits and as such discuss its short run and long run profit situation. Use relevant diagrams to support your answer. Ans suppose more firms are interested in joining the market and over the years, the market structure is characterised by monopolistic competition. Discuss the implication on the firm’s short-run and long run profits with the use of relevant diagrams.Assume that Sleek is currently eaming short-run economic profit in a monopolistically competitive market. On the given graph, show Sleek's profit- maximizing output and price. Using the point drawing tool, draw the short-run equilibrium price and quantity for Sleek. Carefully follow the instructions above, and only draw the required objects. From, the given graph we infer that the short-run equilibrium quantity is units and price is $. 14- 12- 10- 8- 6- 4- 2- Price ($) 300 600 MC D ATC MR 900 1200 1500 1800 2100 QuantitySuppose 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. 100 90 Mon Comp Outcome 80 70 60 Min Unit Cost 50 ATC 40 30 20 10 MC MR Demand 10 20 30 40 50 60 70 80 90 100 QUANTITY (Thousands of bats) PRICE (Dollars per bat)
- The graph below shows a demand curve for a firm operating in an oligopolistic market. Kinked Demand Price 100 90 80 70 60 50 40 30 20 10 0 MR Quantity D 10 20 30 40 50 60 70 80 90 100 MC O relatively more elastic. O relatively more inelastic. O perfectly elastic. O perfectly inelastic. Compared to a price of $75, at a price of $60 demand is OThe Economic Census revealed that the HHI for fast-food restaruants in the United States is equal to 345. Based on this information, we can classify the fast-food industry as O perfect competition O monopolistic competition O oligopoly O monopolyThe diagram below shows selected cost and revenue curves for a firm in a monopolistically competitive industry. Price ($) 13 7 FIGURE 11-4 90 Quantity 91 MR D MC LRAC Refer to Figure 11-4. Which of the following best describes this industry if all firms have the same cost and revenue curves and are producing output of q 0? O firms are earning positive profits and new firms will enter the industry until all firms are operating at their minimum LRAC all firms will try to minimize costs and move toward minimum LRAC O O firms are incurring losses and firms will exit this industry O firms are earning zero profits and there is no incentive for firms to enter or leave the industry O all firms are earning positive profits and there is no incentive for firms to enter or exit the industry