1. What is the markup for this firm? $_______
2. What is this firm's excess capacity?
Homework Answers
1. Markup for this firm = $14 - $5 = $9.
Reason : Because the price exceeds MC and an extra unit sold at the posted price means more profit for the firm.
2. 160 - 120 = 40.
Reason : There is an excess capacity in monopolistic competition in the long run as output is less than the efficient scale of perfect competition i.e. at MC=ATC.
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1. What is the markup for this firm? $_______
2. What is this firm's excess capacity?
1.As product differentiation decreases, ________ increases. markup demand inelasticity marginal cost excess capacity
1.As product differentiation decreases, ________ increases. markup demand inelasticity marginal cost excess capacity
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