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- Why under monopolistic competition, a firm doesn't faces perfectly elastic demand curve.side note number one is answered i need help with 2 , 3 and 4. Joyce owns a gas station and monopolizes gas sales along a remote stretch of road. In February, Joyce stayed open even though she earned negative economic profits. Draw a correctly labeled graph for Joyce’s gas station during February and show each of the following. The profit-maximizing output and price labeled QJ and PJ The average total cost curve labeled ATC A deadweight loss, completely shaded What must have been true for Joyce to continue operating during the month of February even though she earned negative economic profit? Assume that fixed costs for Joyce’s gas station decrease. Would Joyce’s profit-maximizing quantity increase, decrease, or stay the same in February? Explain. During the month of July, demand increases so that Joyce now earns a positive economic profit. However, she realizes her profits would have been higher if she had reduced the price of gasoline. At the quantity sold in…Please dont copy and paste the answers One of your former peers starts up a firm after graduating NYUAD. However, he didn’t take Markets so is unsure if he is behaving optimally. He’s asked you for help. His firm faces monopolistic competition, has diminishing returns to its inputs and uses a fixed input. He is producing at a quantity such that P=MC, and he makes a positive profit. a. Draw the Demand curve, MR, MC, and ATC reflecting this situation on a graph. Label the quantity, price and profit of the firm under his strategy. b. Is his strategy maximizing his profits? Explain how he would do so if not. Label the quantity, price and profit of the firm under the optimal strategy on your graph in part a. c. He asks you about what you predict might happen to his profits in the future. What do you expect will happen to profits in this industry as we go to long run and why? What is the key assumption of monopolistic competition that gives you your conclusion?
- a. b. C. d. Price panel a panel b panel c panel di Price (a) (c) MA MC MR ATC Quantity MC ATC D Quantity Price Price (b) MR (d) MC Quantity MC مما ATC Refer to Figure 3. Assume a monopolistic competitive environment: From the 4 graphs depicted, which one of them represents a short-run equilibrium that encourages the entry of other firms? ATC Quantity DA perfectly competitive firm is onsidered to be more generous in terms of price and quantity of output in comparison to firm belonged to monopoly and monopolistic markets. C. If firms incurring loss in this market begin to exit the market, what will happen to the market equilibrium? Demonstrate your answer using a simplified graph. d. The firm wishes to supply output more than the quantity determined under the equilibrium condition, is it worth to pursue?Which of the following statements about monopolies are correct? There is more than one correct answer to this question. You must mark all of the correct answers to receive full credit for this question. OAt the profit maximizing output for a monopoly, P< MR. OMonopolies are always illegal in the U.S. O If a firm enjoys decreasing returns to scale, this may help it to become a monopoly. In a pure monopoly, the firm is the industry. O A patent can help a firm to become a monopoly.
- Market Structure a. In the short run, if a perfectly competitive firm produced at the quantity of productive efficiency, would it generate the highest profit level possible? Why or why not? b. Draw a graph to represent a natural monopoly and describe the circumstances that would permit natural monopoly to exist. Would it be wise for government to break up natural monopolies? Give some examples of natural monopolies3.1. Fill out the table below. Unit Marginal Marginal Quantity (Q) Price (P) Total Revenue (TR) Fixed Cost (FC) Variable Cost (VC) Total Cost (TC) Profit Cost Revenue 14 $10 $3 $43 15 $10 $51 16 $10 $60 17 $10 $70 18 $10 $81 3.2. Is the table above pertaining to a perfectly competitive firm or monopoly? How can you tell?(a) What is meant by consumer surplus and producer surplus? Using a diagram show that there is a deadweight loss to society from monopoly in terms of total surplus. (b) In what ways is a monopolistically competitive firm likely to be less efficient than one under perfect competition?
- A publisher faces the following demand schedule for the next novel from one of its popular authors:Price Quantity Demanded100 090 100,00080 200,00070 300,00060 400,00050 500,00040 600,000 530 700,00020 800,00010 900,0000 1,000,000The author is paid $2 million to write the book, and the marginal cost of publishing the book is a constant $30 per book.d. In your graph, shade in the deadweight loss. Explain in words what this means. e. If the author was paid $3 million instead of $2 million to write the book, how would this affectthe publisher’s decision regarding the price to charge? Explain. f. Suppose the publisher was not profit-maximizing but was concerned with maximizing economicefficiency. What price would it charge for the book? How much profit would it make at thisprice? (Give two characteristics of the following:a. a perfectly competitive marketb. a monopolistic marketExercise A.12. Explain the differences between the supply and demand curves of a firm in perfect competition and a monopoly.
