4. Is monopolistic competition efficient? Suppose that a company operates in the monopolistically competitive market for denim jackets. The following graph shows the demand curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve for the firm. Place a black point (plus symbol) on the graph to indicate the long-run monopolistically competitive equilibrium price and quantity for this firm. Next, place a grey point (star symbol) to indicate the minimum average total cost the firm faces and the quantity associated with that cost. 100 90 80 Mon Comp Outcome 70 60 Min Unit Cost PRICE (Dollars per jacket) 50 ATC 40 30 20 MC MR Demand 0 10 20 30 40 50 60 70 80 90 100 QUANTITY (Thousands of jackets)lomework Ch 16) q a so Min Unit Cost 50 40 30 PRICE (Dollars perjacket) 20 10 QUANTITY (Thousands of jackets) Because this market is monopolistically competitive, you can tell that it is in longrun equilibrium by the fact that V at the optimal quantity for each firm. Further, a monopolistically competitive firm's average total cost in longrun equilibrium is average total cost. True or False: This indicates that there is a markup on marginal cost in the market forjackets. 0 True O False Monopolistically competitive markets may be socially inefficient clue to the presence of too many or too few firms. The presence of the v externality implies that there is too little entry of new firms in the market. 70 60 Min Unit Cost 50 PRICE (Dollars per jacket) ATC 40 30 20 10 M MR Demand 10 20 30 40 50 60 70 80 90 100 QUANTITY (Thousands of jackets) Because this market is monopolistically competitive, you can tell that it is in long-run equilibrium by the fact that _ at the optimal quantity for each firm. Further, a monopolistically competitive firm's average total cost in long-run equilibrium is the minimum average total cost. True or False: This indicates that there is a markup on marginal cost in the market for jackets. equal to greater than O True less than O False Monopolistically competitive markets may be socially inefficient due to the presence of too many or too few firms. The presence of the externality implies that there is too little entry of new firms in the market.To an Min Unit 0051 50 40 PRICE (Dollars perjacket) 3U 2U 1U QUANTITY (Thousands of jackets) Because this market is monopolistically competitive, you can tell that it is in longrun equilibrium by the fact that V at the optimal quantity for each firm. Further, a monopolistically competitive firm's average total cost in longrun equilibrium is V the minimum average total cost. True or False: This indicates that there is a markup on marginal cost in the market forjackets. 0 True product variety businessea" ng petitive markets may be sociallyr inefcient clue to the presence of too many or too few firms. The presence of the v externality implies that there is too little entry of new firms in the market