Question
In: Economics
When a profit-maximizing firm in a monopolistic competitive market is in long-run equilibrium, marginal cost is...
When a profit-maximizing firm in a monopolistic competitive market is in long-run equilibrium, marginal cost is rising since an increase in production would increase average total cost.
true or false
The product-variety externality associated with monopolistic competition arises because in markets that are monopolistic competitive markets, firms try to differentiate their products.
true or false
If the monopolistic competitive firm is currently producing output at a level where the marginal cost curve intersects the demand curve, then it is producing at the social optimum; however, reducing output will cause profit to increase because marginal cost exceeds marginal revenue at the social optimum.
true or false
Solutions
Expert Solution
a) False, if they are in the long run equilibrium they will just produce at the point were the MR=MC and not produce any more.
b) true, as there are many firms and they all have some differentiated products the product variety externality occurs.
c) True at the socially optimum level the firm will not be able to produce profitably because then in that case the MC wlll be more than the MR.
Rahul Sunny answered 2 years agoRelated Solutions
When a profit-maximizing firm in monopolistic competition is producing its long-run equilibrium quantity, A) it will...
When a profit-maximizing firm in monopolistic competition is
producing its long-run equilibrium quantity,
A) it will be earning economic profit.
B) its price will equal its marginal cost.
C) its price will be equal to its average total cost.
D) its marginal revenue will exceed its marginal cost.
The long-run profit-maximizing equilibrium of a firm in monopolistic competition in many ways is similar as...
The long-run profit-maximizing equilibrium of a firm in
monopolistic competition in many ways is similar as well as
different from both under monopoly and that for a firm in a
perfectly competitive market. Using three separate diagrams,
articulate the differences and similarities (demand conditions,
cost conditions and level of profits).
In long-run equilibrium for both a competitive market and monopolistic competition accounting profit is zero. price...
In long-run equilibrium for both a competitive market
and monopolistic competition
accounting profit is zero.
price equals marginal revenue.
long-run average cost is minimized.
economic profit is zero.*
productive efficiency is achieved.
In long run equilibrium for a perfectly competitive firm; the firm will produce where A. Marginal...
In long run equilibrium for a perfectly competitive firm; the
firm will produce where
A. Marginal cost is at a minimum
B. Average fixed cost is at a minimum
C. Average variable cost is at a minimum
D. Average total cost is at a minimum
Height of a marginal product product curve shows:
A. the additional cost of producing one more unit of a good
B. the additional production from producing one more unit of
the good.
C. the additional...
Describe the profit maximizing position of a perfectly competitive firm in the long-run. Use a diagram...
Describe the profit maximizing position of a perfectly
competitive firm in the long-run. Use a diagram to motivate your
answer.
Consider a profit-maximizing firm operating in a perfectly competitive industry. If the equilibrium market price of...
Consider a profit-maximizing firm operating in a perfectly
competitive industry. If the equilibrium market price of the good
falls below the minimum of the firm's average total cost curve but
is greater than the minimum of its average variable cost curve, the
firm:
Group of answer choices
should increase the price of its product in order to increase
profits
should increase the price of its product in order to sell more
units of output
should shut down and suffer a...
A profit-maximizing firm in a perfectly competitive market operates in the short run with total fixed...
A profit-maximizing firm in a perfectly competitive market
operates in the short run with total fixed costs of D
$2,250 and total variable costs (TVC) as is below. The
firm can only produce integer amounts of output (Q):
Q (Output)
TVC (Total Variable Cost
0
0.00
1
2,500
2
4,000
3
5,000
4
6,200
5
7,600
6
9,360
7
11,500
8
13,860
9
16,450
10
19,200
11
22,310
3a. How much output should the firm
produce if it can sell...
A profit-maximizing firm in a perfectly competitive market operates in the short run with total fixed...
A profit-maximizing firm in a perfectly competitive market
operates in the short run with total fixed costs of
$6,500.00 and total variable costs (TVC) as is below. The
firm can only produce integer amounts of output (Q)
Q
TVC
0
0.00
1
8,000.00
2
15,000.00
3
20,000.00
4
23,000.00
5
25,000.00
6
29,000.00
7
33,500.00
8
39,000.00
9
46,000.00
10
53,500.00
11
61,200.00
12
72,000.00
_______3. (2.5 pts.) How much output should the firm produce if
it can sell all...
1.In long-run competitive market equilibrium, price equals _______ and economic profit is ______.
1.In long-run competitive market equilibrium, price equals
_______ and economic profit is ______.A. Minimum average variable cost; greater than zeroB. Minimum average total cost; zeroC. Maximum marginal cost; zeroD.Minimum fixed cost; greater than zero2. Which of the following market structures has the highest
barriers to
entry? A. Perfect
competition B.
Monopoly C. Monopolistic
competition D. Oligopoly3. Which of the following is consistent with a competitive
market? A. A small number of
firms B. Exit of small firms when profits are high for large
firms C. Zero economic...
A monopolistically competitive firm in long-run equilibrium: will make negative profit. will make zero profit. will...
A monopolistically competitive firm in long-run equilibrium:
will make negative profit.
will make zero profit.
will make positive profit.
Any of the above are possible.
None of the above are possible.
The Cournot model of symmetric duopoly suggests that the market
equilibrium position is such that:
one firm is larger than the other in the final equilibrium and
the largest firm produces the largest quantity of output.
economic profits are zero for both firms.
total industry output is the same...
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