1. What happens to efficiency and capacity when monopolistically competitive firms produce where their ATC meets...

1. What happens to efficiency and capacity when monopolistically competitive firms produce where their ATC meets the demand curve? (Name and explain the specific concepts.)

IN YOUR OWN WORDS PLEASE.

Expert Solution

When a monopoly firm produces at a point where the AC curve meets its demand curve they earn no supernormal profit. At that pint hey just break even.

The demand curve of the monopoly firm is downward sloping that means they have a certain control over their product and they are not the price takers in the market. Because of the downward sloping curve even when they produce at the point where the curves meet the monopoly will still have excess capacity lying with them and will not reach the efficient point where the perfect competition reach by producing at the lowest point of the AC curve.

Here, in this graph, the firm is producing at the point where the AC curve meets the demand curve here its profit is zero only breaking even but the excess capacity still remains because of the downward sloping demand curve.

Rahul Sunny answered 2 years ago

What is meant by the term "excess capacity" as it relates to monopolistically competitive firms and...

What is meant by the term "excess capacity" as it relates to monopolistically competitive firms and explain with good examples? [7 marks]

1.Perfectly competitive firms achieve allocative efficiency when they produce such that: Multiple Choice a.P = MC....

1.Perfectly competitive firms achieve allocative efficiency when they produce such that: Multiple Choice a.P = MC. b.P = AC. c.MR = P. d.TR = TC. 2. In Sam's greenhouse operation, labor is the only short term variable input. After completing a cost analysis, if the marginal product of labor is the same for each unit of labor, this will imply that: Multiple Choice a.the average product of labor is always equal to the marginal product of labor. b.the average product...

Compare and contrast monopolistically competitive firms with competitive firms. Be sure to explain what is similar...

Compare and contrast monopolistically competitive firms with competitive firms. Be sure to explain what is similar in each industry and what is different. Make sure to address how many firms are in the industry, whether the product is homogenous or differentiated, conditions of entry and exit, and both short-run and long-run economic profit. (pls explain more as I'm only in intro to Micro, thx)

Monopolistically competitive market with N firms

Consider a monopolistically competitive market with N firms. Each firm's business opportunities are described by the following equations:Demand: Q=100/N-PMarginal Revenue: MR=100/N-2QTotal cost: TC=50+Q(squared)Marginal Cost: MC=2Qa. How does N, the number of firms in the market, affect each firms demand curve? Why.b. How many units does each firm produce? (The answer to this and the next two questions depend on N.)c. What price does each firm charge?d. How much profit does each firm make?e. In the long run, how many firms...

compared with firms in a perfectly competitive industry, firms in a monopolistically competitive industry are inefficient...

compared with firms in a perfectly competitive industry, firms in a monopolistically competitive industry are inefficient because thery a. do not lower the product price if put prices fall b. waste resources by producing an excess amount of output c. restrict their output levels to maximiz profirs d make economic profits in the long run. which of the following statement is true about a firm in a perfectly competitive market a. the demand for its product is a downward sloping...

A monopolistically competitive industry does not display ________ in either the short-run, when firms are making...

A monopolistically competitive industry does not display ________ in either the short-run, when firms are making economic profits and losses, nor in the long-run, when firms are earning ________. allocative efficiency; positive economic profits allocative efficiency; zero economic profits productive efficiency; negative economic profits

Which of the following is most accurate? perfectly competitive firms are price takers. monopolistically competitive firms...

Which of the following is most accurate? perfectly competitive firms are price takers. monopolistically competitive firms offer a differnetiated product. In a duopoly, only two firms are competing Monopolies use the rule MR=MC to maximize profit. All the above.

A monopolistically competitive firm sells a differentiated product but there are many firms and there is...

A monopolistically competitive firm sells a differentiated product but there are many firms and there is competition involved..How do such firms still manage to promote their product? Do they make Economic profit in the long run?

In the short-run, firms in a monopolistically competitive market are making profits. Explain what will tend...

In the short-run, firms in a monopolistically competitive market are making profits. Explain what will tend to happen to the market and the firms profits in the long-run.

1. In the short run, monopolistically competitive firms: a) will earn zero economic profits by acting...

1. In the short run, monopolistically competitive firms: a) will earn zero economic profits by acting like a monopolist. b) can earn positive economic profits by acting like a monopolist. c) will earn zero economic profits by acting like a perfectly competitive firm. d) can earn positive economic profits by acting like a perfectly competitive firm. 2. Product differentiation refers to: a) the process of informing the public of differences in products as a result of error. b) firms who...

Question