Back to Assignment Attempts 21.9 I 156 I .3. Keep the Highest 21.9 /25 1. Characteristics of monopolistic competition Consider the monopolistically competitive market structure, which has some features of a perfectly competitive market and some features of a monopoly. Complete the following table by indicating whether each attribute characterizes a perfectly competitive market, a monopolistically competitive market, both, or neither. Check all that apply. Attributes Perfectly Competitive Market Monopolistically Competitive Market Few sellers Product differentiation Homogeneous products Price is equal to marginal cost Continue without saving 2. Monopolistic competition in the short run and the long run Fantastique Bikes is a company that manufactures bikes in a monopolistically competitive market. The following graph shows Fantastique's demand curve, marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC). Place the black point (plus symbol) on the graph to indicate the short-run profit-maximizing price and quantity for this monopolistically competitive company. Then, use the green rectangle (triangle symbols) to shade the area representing the company's profit or loss. 500 450 Monopolistically Competitive Outcome 400 350 300 Profit or Loss 250 PRICE, COSTS, AND REVENUE (Dollars per bike) ATC 200 150 100 50 AMC MR Demand 500 O 50 100 150 200 250 QUANTITY (Bikes)Homework (Ch 10) Given the prot-maximizing choice of output and price, the shop is earning v prot, which means there are V shops in the industry than in long-run equilibrium. Now consider the long run in which bike manufacturers are free to enter and exit the market. Show the possible effect of easy entry and exit by shifting the demand curve for a typical individual producer of bikes on the following graph. ('3 Demand PRICE (Dollars per bike) D mand QUANTITY (Bikes) Homework (Ch 10) Given the prot-maximizing choice of output and price, the shop is earning V prot, which means there are V shops in the industry than in long-run equilibrium. negative Now consider the long run in which bike manufacturers are free to enter an positive arket. Show the possible effect of easy entry and exit by shitting the demand cu Demand PRICE (Dollars per bike) D mand QUANTITY (Bikes) Homework (Ch 10) Given the prot-maximizing choice of output and price, the shop is earning v prot, which means there are v shops in the industry than in long-run equilibrium. Now consider the long run in which bike manufacturers are free to enter and exit the market. M Show the possible effect of easy entry and exit by shifting the demand curve for a typical individual producer of bikes on the following graph. 1:? 7: .D ._ CD a. E L\" T: D v LIJ Q o: D. QUANTITY (Bikes) a? .D L m D. E L\" 3 a V LIJ Q o: o. QUANTITY (Bikes) Which of the following statements are true about both monopolistic competition and monopoly? Check a\" that apply. C] Firms can earn positive economic prot in the long run. C] Firms earn zero economic prot in the long run. C] Firms are not price takers. C] Price is above marginal cost. Back to Assignment Attempts 21.9 I 156 I .3. Keep the Highest 21.9 /25 1. Characteristics of monopolistic competition Consider the monopolistically competitive market structure, which has some features of a perfectly competitive market and some features of a mono poly. Complete the following table by indicating whether each attribute characterizes a perfectly competitive market, a monopolistically competitive market, both, or neither. Check all that apply. Attributes Perfectly Competitive Market Monopolistically Competitive Market Few sellers Product differentiation Homogeneous products Price is equal to marginal cost Continue without saving