Question
In: Economics
Practice Problem Which of the following is NOT a key feature of monopolistic competition? A) A...
Practice Problem
Which of the following is NOT a key feature of monopolistic competition?
A) A markup of price over marginal cost
B) Positive economic profits for firms in the long run
C) Differentiated products among firms in the market
D) Excess capacity
Solutions
Expert Solution
Option B
B) Positive economic profits for firms in the long run
A monopolistic competitive market has free entry and exit in the market. It has its output differentiated from each other.
The firm produces at MR=MC, and the efficient level is at MC=ATC
the level of output MR=MC is lower than the MC=ATC because the MR curve is downward slopigna and MC curve is upward sloping. so the firm has excess capacity at the pofit maximzing level of output.
The firm firm differntiate products to have some market power.
The firm hase P>MC so there is a markup over MC because the firm has a downward sloping demand curve because of differentiaed product so the firm can charge a price above MC.
The market has free entry and exit, so the economic profit, in the long run, is zero because if there is an economic profit, then the new firms will enter up there is a zero economic profit and vice verse.
Rahul Sunny answered 1 year agoRelated Solutions
Perfect competition market, monopolistic competition market, oligopoly and monopoly markets product feature, number of buyers /...
Perfect competition market, monopolistic competition
market, oligopoly and monopoly markets product feature, number of
buyers / sellers, entry barrier, long Compare in terms of period
profit and Herfindahl-Hirschman index.
Recognize the key characteristics of monopolistic competition Describe the economic efficiency and other characteristics of monopolistic...
Recognize the key
characteristics of monopolistic competition
Describe the economic
efficiency and other characteristics of monopolistic competition in
the long run
Explain the economic role
of advertising
Define price
discrimination
Compare and contrast
perfect and imperfect price discrimination
Identify an oligopoly as a
market structure where firms are highly interdependent
Describe collusion and
strategic pricing decisions
Describe game theory and
why it is applied to oligopoly
Question 1 In the framework of monopolistic competition, which of the following is not a possible...
Question 1
In the framework of monopolistic competition, which of the
following is not a possible outcome for a firm
that runs a successful advertising campaign?
Select the correct answer below:
allocative efficiency
the ability of the firm to charge a higher price
the ability of the firm to sell a greater quantity
an increase in profits for the firm
Question 2
In a market characterized by monopolistic competition, how will
new firms choose to engage this market?
Select the...
List the conditions required for monopolistic competition. Which of these makes monopolistic competition seem like perfect...
List the conditions required for monopolistic competition.
Which of these makes monopolistic competition seem like perfect
competition and which like monopoly?
List the conditions required for oligopoly.
State the profit-maximizing conditions under oligopoly
Compare the profit-maximizing conditions under monopoly to
those under oligopoly.
Compare the profit-maximizing conditions under monopolistic
competition to those under perfect competition both in the
long-run.
Monopolistic Competition
The market for peanut butter in Nutville is monopolistically competitive and in long-run equilibrium. One day, consumer advocate Skippy Jif discovers that all brandsof peanut butter in Nutville are identical. Thereafter, the market becomes perfectly competitive and again reaches its long-run equilibrium. Using an appropriatediagram, expalin whether each of the following variables increases, decreases, or stays the same for a typical firm in the market.a. priceb. quantityc. average total costd. marginal coste. profit
Monopolistic Competition
Sparkle is one firm of many in the market for toothpaste, which is in long-run equilibrium.a. Draw a diagram showing Sparkle's demand curve, marginal-revenue curve, average-total-cost curve, and marginal-cost curve. Label Sparkle's profit-maximizing outputand price.b. What is Sparkle's profit? Explain.c. On your diagram, show the consumer surplus derived from the purchase of Sparkle toothpaste. Also show the deadweight loss relative to the efficient level ofoutput.d. If the government forced Sparkle to produce the efficient level of output, what would happen...
Which of the following is a characteristic of both monopolistic competition and monopoly? Group of answer...
Which of the following is a characteristic of both monopolistic
competition and monopoly? Group of answer choices
i. Firms face significant barriers to entry.
ii. A firm's marginal revenue curve is below its demand
curve.
iii.In the long run, a firm will earn zero economic profit.
iv In the long run, a firm will produce a level of output that
corresponds to the minimum point of its average total cost
curve.
1. In the monopolistic competition model with internal economies of scale, which of the following is...
1. In the monopolistic competition model with internal economies
of scale, which of the following is NOT an element of the gains
from trade?
more varieties available to consumers
lower price
lower average cost
2. With trade based on economies of scale, we expect to see
specialization
incomplete specialization
we cannot say without more information
No answer text provided.
Intra industry trade refers to trade
of different goods
within the same industry
within the same country
across different industries
lower...
Which of the following items are sold by firms in monopolistic competition in a developed economy...
Which of the following items are sold
by firms in monopolistic competition in a developed economy such as
the U.S? Explain your selection.
Potato chips
Television
Airplane
Battery
Rice
Why do Coca-Cola and PepsiCo spend
huge amounts on advertising? Do they benefit? Does the consumer
benefit? Explain your answer by constructing a game to illustrate
the choices Coca-Cola and PepsiCo make.
1. Under monopolistic competition, which of the following is true: A) In the short run, the...
1. Under monopolistic competition, which of the following is
true:
A) In the short run, the firm behaves as a firm in perfect
competition.
B) In the long run equilibrium, firms will make positive
profits.
C) If there are economic profits, in the long run new firms
enter leading to a decrease in demand for the existing firm.
D) All of the above are true.
E) None of the above are true
2. In the market equilibrium, a single-price monopolist...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- You are tasked with assessing the health department’s intervention program in preventing recurrence of acute alcohol...
- Compare the MOSFET, JFET , and BJT and identify the reasons these devices behave differently. What...
- How would you use SAS Enterprise Miner to create a neural network model of your example?
- Explain the use of neural networking modeling in predictive analytics.
- Current Market Mix of Netflix, as detail as possible, please.
- This is all one question, thank you so much in advance! You must evaluate a proposal...
- X Company is considering the purchase of a new processor that costs $200,000. Shipping and setup...
ADVERTISEMENT