Monopolistically Competitive Market 1. What is the most important difference between perfectly competitive markets and monopolistically competitive markets? Why are demand and marginal revenue represented by the same curve for a rm in a perfectly competitive market, but by separate curves for a rm in a monopolistically competitive market? . Fill in the columns for TR, MR, MC, AT C, and prot. If Panera Bread wants to maximize prots, what price should it charge for a atbread pizza, What quantity should it sell, and What will be the amount of its total prot? Pizzas Price Total Marginal Total Marginal Average Prot Costs and revenue per case 22 16 14 13 12 l l l 24 30 38 Quantily (cases) 3. The gure above shows cost and demand curves for a monopolistically competitive producer of iced tea. Use the diagram to answer the following questions. What is the prot-maximizing output level? What is the prot-maximizing price? At the prot-maximizing output level, how much prot will be realized? Does this graph most likely represent the long run or the short run? Why? 9-957!\" Costs and ATC revenue (dollars per haircut) 0 110 140 Quantity (haircuts MR per week) 4. The gure above depicts a monopolistically competitive barber shop. Use the diagram to answer the following questions. a. Suppose the average variable cost of production is $15 when output equals 110 haircuts and $15.25 when output equals 140 haircuts. If the rm wants to maximize its prot or minimize its losses, how many haircuts will it produce and what price should it charge? Explain your answer. Calculate the rm's prot or loss. What is likely to happen in this industry over time as it moves to its new long-run equilibrium? Suppose the barber shop depicted in the diagram remains in the industry. Is this barber shop likely to produce this same quantity of haircuts as in part (a) in the long run? Monopoly 5. Identify four reasons for high entry barriers. Briefly explain each reason. 6. Explain whether a monopoly that maximizes profit will also be maximizing revenue and production. Price and cost per unit 45 MC 32 . . .. ATC . . . .. . . . . . ........ 22 20 . . . . .. 18 . . . .? . . . 15 . . . . . . Demand . . . . . . .; MR 0 50 70 80 90 Quantity7. What is the profit-maximizing quantity and what price will the monopolist charge? a. What is the total revenue at the profit-maximizing output level? b. What is the total cost at the profitmaximizing output level? c. What is the profit? d. What is the profit per unit (average profit) at the profit-maximizing output level? e. If this industry was organized as a perfectly competitive industry, what would be the profit- maximizing price and quantity