Explain why a monopolistically competitive firm should be operating below the minimum efficient scale.
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Explain why a monopolistically competitive firm should be operating below the minimum efficient scale.
Question .1 Is a monopolistically competitive firm productively efficient? Is it allocatively efficient? Why or why not? QUESTION. 2 What stops oligopolists from acting together as a monopolist and earning the highest possible level of profits? Is there a way for oligopolists to attempt to maximize profits? What are the risks of such attempts (and ultimately, generally cause such attempts to fail)? QUESTION. 3 Briefly discuss the various ways monopolistically competitive firms can differentiate their products?
a) Why is a monopolistically competitive firm less efficient than a perfectly competitive firm? It produces at an output that is lower than its minimum efficient scale (MES) It earns positive economic profits in the long run It deters entry of new firms by putting up entry barriers All of the answers are correct b) Suppose a monopolistically competitive firm has MC=4Q+5. Its demand is P=145-3Q and marginal revenue is MR=145-6Q. What is its profit-maximizing output level? 17 14 16...
. Use math and a graph to show that a monopolistically competitive firm maximizes its profit where it is operating at less than full capacity or minimum efficient scale, which is the smallest quantity at which the average cost curve reaches its minimum (the bottom of a U-shaped average cost curve).
4. Is monopolistic competition efficient? Suppose that a firm produces wool jackets 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...
15) A monopolistically competitive firm will a. have some control over its price because its product is differentiated. b. always produce at the minimum efficient scale of production. c. charge the same price as its competitors do. d. produce an output level that is productively and allocatively efficient.
The figure below depicts a monopolistically competitive firm operating in the short run. Label the diagram with the items listed to the right of the figure. You will have to decide whether the firm is making a profit or a loss.
4. Is monopolistic competition efficient? Suppose that a firm produces polo shirts 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...
Why does a monopolistically competitive firm make zero profit in the long-run? Explain graphically and verbally.
Suppose that a firm produces wooden train engines 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. Because this...
is price equal to minimum LRAC in a monopolistically competitive industry in long-run equilibrium? why or why not?