A firm in monopolistic competition earns zero economic profit in the long-run.
In the long-run, firm is said to be in equilibrium when it is producing that level of output corresponding to which ATC curve is tangent to the demand curve.
At this level of output, Price equals ATC and thus firm earns zero economic profit.
Following is the required figure -
2. Draw an example of a firm in monopolistic completion that is earning a zero economic...
II.A. Identify and label the profit-maximizing level of output (Q) that will be pursued by this 'monopolistic' firm. (5 Points) $$ MC ATC AVC Market Demand Output(Q) MR II.B. Draw and label the rectangle that represents the Total Revenue (TR) generated by this 'monopolistic' firm. (5 Points) $$ MC ATC AVC Market Demand -Output(Q) MR II.C. Draw and label the rectangles that represent Total Cost (TC), Total Fixed Cost (TFC) and Total Variable Cost (TVC) generated by this ‘monopolistic' firm....
QUESTION 7 Monopolistic competitive firms in the long run earn: positive economic profits. zero pure economic profits. negative economic profits. Positive, zero, or negative economic profits. QUESTION 8 Which of the following statements best describes firms under monopolistic competition? Profits will be positive in the long run. Price always equals average variable cost. In the long run, positive economic profit will be eliminated. Marginal revenue equals minimum average total cost in the short run. QUESTION 9 Which of the following...
The monopolistically competitive firm represented in the graph is in: MC ATC $10 $8.50 $2 MR O long-run equilibrium since it is earning zero profit. O short-run equilibrium since it is earning zero proft. O short-run equilibrium, but not long-run equilibrium since it is earning positive economic profit O long-run equilibrium, but not short-run equilibrium since it is earning positive economic profit
1. Draw two graphs. On the first, show the short-run profit maximizing output of an individual firm earning an economic profit, including MR, MC, AVC, and ATC. On the second, show the short-run market equilibrium price and quantity. Explain how the industry supply curve and the market equilibrium price and quantity are determined. 2. What is the relationship between the price on the two graphs? Why does this relationship exist? 3. Explain why a firm in a perfectly competitive industry...
2. Use the graph below to figure out if the following price searching firm is profitable, at zero economic profit, or losing money. Label the firm's demand, MC, ATC, and MR curves. Calculate the quantity of the profit or loss, and indicate what the equilibrium price and quantity is. 30 40 50 60 70 80 90 100Q
One thing that makes monopolistic competition similar to perfect competition is that, in the a short run, neither can earn positive economic profit. b long run, both are guaranteed positive economic profit. c long run, both will earn zero economic profit. d short run, both are guaranteed positive economic profit. e long run, both could earn positive economic profit, but monopolistic competitors will earn more than perfect competitors. Refer to the following graph to answer the following questions: In the...
8. A perfectly competitive firm is earning an economic profit. In the short run it should In the long run it should A. shut down; expand B. produce where MC = MR; leave the industry C. produce where MC = MR; expand production D. shut down; exit the industry 9. In the long-run equilibrium of a competitive market with identical firms, what is the relationship between price P, marginal cost MC, and average total cost ATC? A. P> MC and...
Draw and label a graph depicting a monopolistic market from perspective of a single firm. Make sure you illustrate the profit maximizing price and quantity. a. Start with a graph depicting market equilibrium for the monopolistic market b. Modify the graph to demonstrate that the price at the profit maximizing level of output is above the average variable cost curve,but below the average cost curve c. Is the firm making a profit or loss? d. Will the firm decide to...
Draw and label a graph depicting a monopolistic market from the perspective of a single firm. Make sure you illustrate the profit maximizing price and quantity . Start with a graph depicting market equilibrium for the monopolistic market . Modify the graph to demonstrate that the price at the profit maximizing level of output is below the average variable cost curve . Discuss the following characteristics of a the firm depicted in part 1 : Is the firm making a...
2. In a perfectly competitive market, there are initially economic profits. Firm entry causes the market supply curve to shift rightwards, but the market does not reach its long run state. a. Draw two corresponding graphs, side-by-side, that allustrate this shift. One is the market supply and demand graph, and the other is the profit-maximizing production choice of a typical firm. Using your graph, explain b. How do price and marginal revenue change as firms enter c. How do MC...