Monopolistically Competitive Market

Monopolistic competition is characterized by a:

large number of firms and low entry barriers.

Refer to the above diagram for a monopolistically competitive firm in short-run equilibrium. This firm will realize an economic:

profit of $480.

When a monopolistically competitive firm is in long-run equilibrium:

P = MC = ATC.

In which of the following continuum of competition going from the most competition to the least amount of competition is monopolistically competitive markets correctly placed?

pure competition, monopolistic competition, oligopoly, pure monopoly

The monopolistically competitive seller maximizes profit by producing at the point where:

MR=MC

Refer to the above diagram for a monopolistically competitive firm in short-run equilibrium. The profit-maximizing price for this firm will be:

16

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

160

Nonprice competition refers to:

advertising, product promotion, and changes in the real or perceived characteristics of a product.

Which of the following statements is correct?

In the long run purely competitive firms and monopolistically competitive firms earn zero economic profits, while pure monopolies may or may not earn economic profits.

Long-run equilibrium for a monopolistically competitive firm where economic profits are zero results from:

relatively easy entry.