ch 13

In the long run a monopolistically competitive firm:

produces where P = ATC.

An important similarity between a monopolistically competitive firm and a purely competitive firm is that:

economic profit tends toward zero for both

Refer to the diagram for a monopolistically competitive firm in short-run equilibrium. This firm's profit maximizing price will be:

16

Refer to the diagram for a monopolistically competitive firm in the short-run equilibrium. The profit- Maximizing output for this firm will be

160

Refer to the diagram. In short-run equilibrium, the monopolistically competitive firm shown will set its price:

above ATC

Refer to the diagram. The monopolistically competitive firm shown:

is realizing an economic profit.

Which of the following is correct?

the greater the degree of product variation, the greater is the excess capacity problem.

Refer to the profits-payoff table for a duopoly. if the firms are acting independently and firm X sets its price at 6 firm Y will achieve the larges profit by selecting:

4

(Last Word) In the Internet search market:

Google holds about 70 percent of the market, while Bing and Yahoo together comprise about 28 percent.

Refer to the payoff matrix. Suppose that alpha and beta agree that they will both pursue a high-price strategy. if beta then cheats on the agreement in order to increase profits, which of the following is true?

If this is a repeated game, alpha can be expected to pursue a low price strategy in future games

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

Refer to the data. Suppose that entry into this industry changes this firm's demand schedule from columns (1) and (3) shown to columns (2) and (3). We can conclude that this industry is:

Monopolistically competitive