Question

Using this graph, apply your knowledge to the following two scenarios.  Show detailed calculations! Scenario 1: Assume...

Using this graph, apply your knowledge to the following two scenarios.  Show detailed calculations!

Scenario 1: Assume that the graph is being applied to a profit-maximizing monopolistically competitive scenario (hint: be careful here - the firm in Scenario 1 is a monopolistic competitor, not a monopolist!).

a. How many units would the monopolistically competitive firm produce in the long run, and what price would be charged per unit?

b. In the long run, how much profit would the monopolistic competitor make? Explain your answer.

Scenario 2: Now assume that the cost curves in the graph are being applied to a profit-maximizing perfectly competitive scenario.

c.  Suppose you were studying a perfectly competitive firm facing the same costs as shown in this graph. In the long run, how many units would this perfectly competitive firm produce and how much would the perfectly competitive firm charge per unit?

d. How much revenue would the perfectly competitive firm (facing the same costs as shown in this graph) make in the long run?

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Answer the following questions comparing monopolistic competition to perfect competition. a. In the long run, how...
Answer the following questions comparing monopolistic competition to perfect competition. a. In the long run, how does the profit earned by a firm operating in a monopolistically competitive market compare to the profit the same firm would earn if it were instead operating in a perfectly competitive market?Please explain. b. In the long run, how does the average cost of production for a firm operating in a monopolistically competitive market compare to the average cost of production for the same...
A profit-maximizing firm in a perfectly competitive industry produces y according to a cost function c(y)...
A profit-maximizing firm in a perfectly competitive industry produces y according to a cost function c(y) = 10+2y+y2. The price of y is 10 per unit. a) What is the firm’s optimal choice of how much y to produce and how much profit do they make? b) Would you expect the long run price of y in this industry to be higher, lower, or the same as 10 per unit? Explain your answer.
Which of the following statements is (are) correct? (x) Selling a good at a price where...
Which of the following statements is (are) correct? (x) Selling a good at a price where the demand curve intersects the marginal cost curve will guarantee that the firm will not earn losses. (y) A profit-maximizing perfect competitor will produce the level of output at which price is equal to marginal cost, but the typical profit-maximizing monopolistic competitor will not. (z) Selling a good at a price where the demand curve intersects the marginal cost curve is consistent with the...
The goal of this problem is to compare perfect competitive outcome (scenario 1) with monopoly outcome...
The goal of this problem is to compare perfect competitive outcome (scenario 1) with monopoly outcome (scenario 2). In both two scenarios, market demand is given by Q=1200-50P. Scenario 1: Consider a perfectly competitive market with 150 identical firms. Each firm’s marginal costs are given by MC=q+4. (4pts) Determine the equation for market supply curve. Find the equilibrium price and industry output. 1. Determine the equation for market supply curve. Find the equilibrium price and industry output. 2. Plot the...
In the long-run competitive equilibrium firms: will make an economic profit and an accounting profit have...
In the long-run competitive equilibrium firms: will make an economic profit and an accounting profit have positive economic profits but no accounting profits make an accounting profit but no economic profit have their accounting profits driven to zero Refer to the data below. If the market price is $6, how many units would a profit-maximizing firm produce? Total cost of 1 unit = $3 Total cost of 2 units = $6 Total cost of 3 unit = $11 Total cost...
Suppose a monopoly has constant marginal costs of $20 per unit. Demand for the monopolist’s product...
Suppose a monopoly has constant marginal costs of $20 per unit. Demand for the monopolist’s product is Q = 100 - P. Please show the work to receive the full credit. i. What are the profit maximizing price and quantity for this monopoly? (4) ii. How many units of the product would the competitive market supply? What would the equilibrium price be? (4) iii. Calculate how much consumer surplus would be lost if this market started off as perfectly competitive...
Suppose a monopoly has constant marginal costs of $20 per unit. Demand for the monopolist’s product...
Suppose a monopoly has constant marginal costs of $20 per unit. Demand for the monopolist’s product is Q = 100 - P. Please show the work to receive the full credit. i.     What are the profit maximizing price and quantity for this monopoly?                    (4) ii.    How many units of the product would the competitive market supply? What would the equilibrium price be?               iii. Calculate how much consumer surplus would be lost if this market started off as perfectly competitive but...
Assume the market price for a good is $15, and the fixed costs of a perfectly-competitive...
Assume the market price for a good is $15, and the fixed costs of a perfectly-competitive producer is $200. Also assume that if the firm decided to operate, its profit-maximizing (or loss minimizing) output would be 30 units, its total variable cost would be $400, and its revenue would be $450 (=$15x30). a. How much would the firm’s profits be? Show your work. b. Would the firm choose to operate in the short-run? Why or why not? c. Would the...
Step 1 Read the following scenario. Imagine a firm in monopolistic competition. A firm in monopolistic...
Step 1 Read the following scenario. Imagine a firm in monopolistic competition. A firm in monopolistic competition produces a product that you are familiar with, such as clothing and food. A monopolistic competition is a market in which: many firms compete each firm produces a product that is slightly different from products of other competing firms each firm competes on product quality, price, and marketing each firm is free to enter and exit the market Step 2 Use the scenario...
1. Suppose in a market, for the typical firm P = 20 - q - b(n...
1. Suppose in a market, for the typical firm P = 20 - q - b(n - 1)q and TC = 2q, where P is the price of output q, b is a parameter determining how sensitive a firm’s output price is to the output of its (n - 1) competitors/rivals, where n is the number of firms in the market, TC is the total cost of production, and q=Q=industry/market output. a. Suppose n = 1 and this market was...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT