Question

Draw a graph to show a monopolistic firm that is making zero profits. Is this an...

Draw a graph to show a monopolistic firm that is making zero profits. Is this an efficient price quantity combination? why or why not?

Homework Answers

Answer #1

can be mentioned that the above graph shows the monopolist competitive scenario in the long run and this is because of the fact that in the long run what happens in the monopolistic competition is that the price is equal to that of average total cost so that the firm will earn zero economic profit and this is efficient scale of production because it is similar to that of perfectly competitive market where there is no benefit and optimal amount of production takes place at break even

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
What are the assumptions of perfect competition and what do they imply about the firms’s profits...
What are the assumptions of perfect competition and what do they imply about the firms’s profits in the short and long run? b) What is the rationale for a firm under perfect competition to i) shut down? and to ii) exit? Defend your answer with an example. c)  Suppose the inverse demand function for a monopolist’s product is given by, P=12-2Q. What is the associated price and marginal revenue if the firm wishes to sell 4 units? d) Draw a graph...
Draw and label a graph depicting a monopolistic market from perspective of a single firm. Make...
Draw and label a graph depicting a monopolistic market from perspective of a single firm. Make sure you illustrate the profit maximizing price and quantity (10 points total). Start with a graph depicting market equilibrium for the monopolistic market (5 points possible). Modify the graph to demonstrate that the price at the profit maximizing level of output is above the average variable cost curve, but below the average cost curve (10 points possible). Is the firm making a profit or...
When does a monopolistic competitor price discriminate to earn positive economic profits? Draw graph
When does a monopolistic competitor price discriminate to earn positive economic profits? Draw graph
14.   A firm making zero economic profits in the LR is broke.T/F 15.   Economic profits are...
14.   A firm making zero economic profits in the LR is broke.T/F 15.   Economic profits are found by: A.  TR + TC B.  TR - (accounting cost + opportunity cost) C.  TR + accounting cost D.  TC + opportunity cost - accounting cost 16.   A firm in a perfectly competitive industry is making losses. Thus, it should increase its price above the market price in order to offset losses. 17.   A firm making zero economic profits will need to close down and then eventually...
Draw a price-setting firm earning zero economic profits. Identify and briefly explain the output             level...
Draw a price-setting firm earning zero economic profits. Identify and briefly explain the output             level and the price level. Label and note the four corners of the areas of revenue, costs, and             profit. Why is this an ‘equilibrium’? When would one expect this result?
In long-run equilibrium firms in both perfect competition and monopolistic competition make zero economic profits. Since...
In long-run equilibrium firms in both perfect competition and monopolistic competition make zero economic profits. Since both do not make any economic profits why is price equal to minimum ATC in perfect competition but there is excess capacity in monopolistic competition?
Draw a diagram illustrating the case of a firm in monopolistic competition losing money. Label the...
Draw a diagram illustrating the case of a firm in monopolistic competition losing money. Label the demand curve D, the marginal revenue curve MR, the marginal cost curve MC, and the average total cost curve ATC. Show the quantity the firm will chose to produce and the price it will charge and mark those Q1 and P1 respectively.
draw graph for both a firm engaged in uniform pricing ( one price for all buyers...
draw graph for both a firm engaged in uniform pricing ( one price for all buyers )and for a firm engaged in indirect segment price discrimination. a- which is more efficient in the economic sense? b- which is better for consumer? c- which results in higher profits? d- normative question- is price discrimination a bad thing?
in the long run, a monopolistic competition firm makes zero profit but is inefficient . Why?...
in the long run, a monopolistic competition firm makes zero profit but is inefficient . Why? Illustrate your explanation with a diagram. Also , indicate the excess capacity and price markup.
Draw a graph of a perfectly competitive firm in the short run that is earning losses...
Draw a graph of a perfectly competitive firm in the short run that is earning losses but will stay in business in the short run. Label everything carefully including the axes, the profit maximizing quantity, price, and economic losses. Explain carefully why the firm will choose to stay in business in the short run. Label the price at which the firm is indifferent between shutting down and staying open, Psd, on the graph.