Econ2023 Ch.13
When a monopolistically competitive firm is in long run equilibrium
MR = MC and P > minimum ATC
Which of the following is correct for a monopolistically competitive firm in long run equilibrium
P excessds minimum ATC
Monopolistic competition is characterized by firms
Producing differentiated products
monopolistically competitive industries are inefficient because
They are overpopulated with firms whose plants are underutilized
In the long run economic theory predicts that a monopolistically competitive firm will
have excess production capacity.
Monopolistic competition is characterized by a
Large numbers of firms and low entry barriers
The Herfindahi index for pure monopolist is
10,000
Refer to the data. If all the firms in the industry merged into a single firm, the Herfindahl index would become
100
Refer to the diagram for a monopolistically competitive firm in short run equilibrium. This firms profit maximizing price will be
16$
Refer to the diagram for a monopolistically competitive firm in short run equilibrium. The profit maximizing output for this will be
160
Refer to the data the Herfindahi index for the industry is
1800
If columns (1) and (2) of the demand data shown are this firm's demand schedule, the profit maximizing level of output will be
8 units
With he demand schedule shown by columns (2) and (3) in long run equilibrium
<price will equal average total cost.
Refer to the diagram for a monopolistic competitive firm. Long-run equilibrium price will be
A
In short run equilibrium, the monopolistically competitive firm shown will set it's price
Above ATC
In the long run, a profit maximizing monopolistically competitive firm sets it price
Above marginal cost
Refer to the diagram. In short-run equilibrium, the monopolistic competitive firm shown set it's price
Below MC
Refer to the diagram which pertain to monopolistically competitive firm long run equilibrium is shown by
Diagram a only
Refer to the diagrams. Which pertain to monopolistically competitive firm. A short run equilibrium entailing economic profits is shown by
Diagram b only
Refer to the diagram, which pertain to monopolistically competitive firm's. Short run equilibrium entailing economic loss is shown by
Diagram c only
In the long run, the price charged by monopolistically competitive firm seeking to maximize profit will
Exceed MC but equal ATC
An industry having a four-firm concentration ratio of 30 percent
Is monopolistically competitive
In the long run , the price charged by the monopolistically competitive firm attempting to maximize profits
Will be equal at ATC
A monopolistically competitive firms marginal revenue curve
a downward-sloping line that lies below the demand curve
Monopolistic competition means
a market situation where competition is based entirely on product differentiation and advertising.
Excess capacity refers to the
amount by which actual production falls short of the minimum ATC output
In the short run, the price charged by a monopolistically competitive firm attempting to maximize profits:
may be either equal to ATC, less than ATC, or more than ATC
The demand curve of a monopolistically competitive producer is
more elastic than that of a pure monopolist, but less elastic than that of a pure competitor
Other things equal, if more firms enter a monopolistically competitive industry
the demand curves facing existing firms would shift to the left.
If the four-firm concentration ratio for industry X is 80:
the four largest firms account for 80 percent of total sales