Price Worksheet Assignment Chap 16 Monopolistic Competition 1. The demand, marginal revenue, marginal cost, and average total cost curves shown below are for a brand name toothpaste produced and sold by monopolistically competitive supplier. 2. How many firms are characteristic of a monopolistically competitive market? A) Only One. B) Just a few firms. Many firms. $10.50 The profit-maximizing quantity of output A) occurs where the marginal revenue from the product equals the marginal cost. B) must be when the average variable cost of the product equals the marginal cost. C) occurs where the price chosen for the product equals the marginal cost. D) is the amount necessary to minimize its average total cost. $9.00 $7,50 $6.00 $4.50 $3.00 $1.50 20 40 MR MC 4 ATC: *** Ne ***8 Demand 140 60 100 120 Quantity (thousands of tubes) 3. Name: 4. 5. Based on the curves provided, what is the profit earned at the A) $0 (zero) A price-making firm A) faces a fixed market price and chooses its level of output. 5. D) The number of firms does not matter. ECON 202 Is product differentiation in monopolistic competition more like a perfectly competitive market or monopoly? Why? Based on the curves provided in the graph: A) What is the profit-maximizing quantity of output? Q^ A B) What is the profit-maximizing price for the product? P^ Based on the information provided, the best formula to calculate the optimum profit is A) Profit= TR (total revenue) - TC (total cost) (B) Profit= (P^ - ATC) * Q^ C) Profit= (P^-MC) * Q^ D) Profit Sales - Explicit Costs B) $18,000 C) $40,000 D) $60,000 E) $120,000 profit-maximizing price and quantity? Draw a demand curve on the graph consistent with long-run entry and equilibrium in this tooth paste market. (hint Should economic profit in the long-run be zero?) B) faces a fixed amount of output and chooses its price. C) can choose any combination of output and price lying of its supply curve. D) can choose any combination of output and price lying on the demand curve for its product. If a profit-maximizing firm's marginal revenue exceeds its marginal cost, then it should A) Raise its price. B) Not change output or price. C) Leave the industry. D) Lower its price. TRUE or FALSE: Advertising and Brand Names are common in both perfectly competitive markets and monopolistically competitive markets. Briefly explain.