Question

In: Economics

Costume jewelry is produced in a monopolistically competitive market. A profit-maximizing producer finds that marginal revenue...

Costume jewelry is produced in a monopolistically competitive market. A profit-maximizing producer finds that marginal revenue = marginal cost = $4.50 when output is 700 rings. An economist studying this information can conclude that:

   

a.the producer is charging a price of $4.50.

   

b.economic profit is $3,150.

   

c.the producer charges a price greater than $4.50.

   

d.new firms will want to enter.

   

e.this producer should produce more than 700 rings

Solutions

Expert Solution

Ans) c is the correct option. the producer charges a price greater than $4.50. In monopolistic competition the demand curve lies above the marginal revenue curve. Price is determined by the demand curve and in thi case price should be greater than marginal revenue curve meaning price is greater than $4.50


Related Solutions

(Attributes) Competitive Market    Monopolistically Competitive Market ___________________________________________________________________________________________________________________________________________ Price is equal to marginal revenu
(Attributes) Competitive Market    Monopolistically Competitive Market ___________________________________________________________________________________________________________________________________________ Price is equal to marginal revenue _________________________________________________________________________________________________________________________________________________ Product Differentiation _____________________________________________________________________________________________________________________________________________ Many Sellers _____________________________________________________________________________________________________________________________________________________ Free Entry _________________________________________________________________________________________________________________________________________________ Complete the table by indicating if each attribute characterizes a competitive market, a monopolistically competitive market, both, or neither. Check all that apply. Please! Respond in a way that is easy to understand and organize it just the way i have shown above.
At the current level of output, a profit-maximizing firm in a competitive market earns average revenue...
At the current level of output, a profit-maximizing firm in a competitive market earns average revenue of $25, has an average total cost of $22 and an average variable cost of $17. If the firm's marginal cost curve is equal to its average total cost curve at an output level of 20,000 units, then the firm earns profit of $60,000 at its current level of output. True False The short-run supply for a firm in a perfectly competitive market will...
A profit-maximizing monopolist charges a price of $36. The intersection of the marginal revenue and marginal...
A profit-maximizing monopolist charges a price of $36. The intersection of the marginal revenue and marginal cost curves occurs where output is 20,000 units and marginal cost is $24. Average total cost for 20,000 units of output is $32. As a result, the monopolist’s profit is more than $80,000. true or false The continuous downward slope of the average total cost curve suggests that the profit-maximizing natural monopolist is able to exploit economies of scale to keep competitors from successfully...
If a firm in a monopolistically competitive industry is profit-maximizing, it should choose its level of...
If a firm in a monopolistically competitive industry is profit-maximizing, it should choose its level of advertising such that the marginal revenue of an additional dollar of advertising: a) Is equal to the elasticity of its demand curve minus 1 b) Is exactly $1 c) Increases revenues by $1 d) Is equal to 1 plus the elasticity of its demand curve e) Is equal to the elasticity of its demand curve
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...
For competitive firms, they set marginal cost equal to market price at profit-maximizing level of output....
For competitive firms, they set marginal cost equal to market price at profit-maximizing level of output. In the short run, marginal revenue curve faced by a competitive firm is downward-sloping. Competitive firms always produce a positive amount of output in the short run (q > 0). Competitive firms earn zero economic profit in the long run equilibrium. All these are True False Questions
a. If the marginal revenue is less than the marginal cost, what should a profit-maximizing company...
a. If the marginal revenue is less than the marginal cost, what should a profit-maximizing company do? b. In a perfectly competitive graph, how does one calculate the economic profit? c. What is the shutdown point in a perfectly competitive firm? ' d. Briefly, what is the difference between economies of scale and diseconomies of scale? Why is it important to the firm? e. Given the following total cost function TC(q) = 1000 + 13q. Find the fixed cost, variable...
why is the level of output at which marginal revenue equals marginal cost the profit maximizing...
why is the level of output at which marginal revenue equals marginal cost the profit maximizing output?
Why is the level of output at which marginal revenue equals marginal cost the profit maximizing...
Why is the level of output at which marginal revenue equals marginal cost the profit maximizing output?
How do a competitive firm, monopolist and monopolistically competitive firm determine its profit-maximizing level of output...
How do a competitive firm, monopolist and monopolistically competitive firm determine its profit-maximizing level of output and price? Explain your answer.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT