final- monopolistic competition

long run equaillibrium price doesn't occur at the lowest point on ATC curve (unlike perfect comp). buyers in monopolistically competitive market will pay a price that is slightly _______ than in a perfectly comp market

higher

in the short run, if price is greater than ATC, a higher price can be charged, and profits will be ______

positive

differentiated services allows market power and lets _____ be set that is different from other competitors

price

reducing economies of scale __________ social welfare and social efficiency

reduces

when multiple shops all provide a similar service there is likely to be a _______ in economies of scale

reduction

Suppose that at the profit maximizing level of output for a monopolistically competitive firm, the price of a good is $10 and the average total cost is $8. Based on this information, the firm is operating in the _____ and we can expect _____.

short run,firms to enter the market

in the long run, the more firms can enter the market, price charged will fall, until all profits are gone. a price will be charged that equals ATC earning how much economic profit?

zero

Shani's Frozen Treats is one of 15 ice cream shops on the boardwalk. If Shani sells ice cream for $5 and sells 100 per day, how much economic profit will she earn in the long run?

0

characteristics of monopolistic competition (3)

1) large number of small firms 2) easy entry and exit of firms 3) differentiated products

one way to differentiate services

advertising

which of the following is most likely a monopolistically competitive market? a)lobsters b) blue jeans c)segway scooters d)commercial aircraft

blue jeans

Suppose that Fortune 8 Casino is one of ten casinos in the town of Luckyville, and every casino is earning substantial economic profits. What is likely to happen in the long run? a)Some casinos will take their profits and exit the market. b)Some casinos will downsize because their profits are not high enough. c)New casinos will enter the market and continue to earn economic profits. d)New casinos will enter the market but economics profits will be eliminated.

d

demand curve of monopoly competition is

downward sloping

Which of the following is not a characteristic of a monopolistically competitive market? a)There are many firms competing in the market. b)Each firm takes the price as given in the market. c)Firms differentiate their products from other firms. d)Firms can earn economic profits in the short run.

each firm takes the price as given in the market