University, Bakersfield-ECON 2018- Essentials of Microeconomics-Fall17-DEAL Acti

Question

University, Bakersfield-ECON 2018- Essentials of Microeconomics-Fall17-DEAL Activities and Due Dates Ch. 10 HW 11/17/2017 1155 PM 79.1/100 Print Calculator Grade Question 27 of 27 Map Sapling Learning Westchesser Gloves is a monopolistically competitive firm that sells leather gloves The graph depicts the market for monopolistic competition Calculate Westchesser's profitloss at the profit maximizing price and enter it below Marginal Cout Average Total Cos $80,000 O $40,000 O $120,000 O $90,000 What will happen to the number of firms in this industry in the long run? Demand Firms will enter this industry increasing the price each fim can sell their gloves at until economic profit is zera Firms will enter this industry decreasing the price each frmcan selltheir gloves Magina Revenue % 10 20 30 40 50 60 70 90 100 at unbil economic profit t oouals zero Firms will exit this industry decreasing the price each firm Firms will eodt this industry increasing the price each irm can sel their gloves at unti economic profit is zero. REFB-04 For computer assistance

Explanation / Answer

Profit = (Price - Average cost)*Quantity

           = (6-4)*40000 = 80000

Firms will enter decreasing price at which firm can sell its gloves until economic profit equals zero. This is because firms earn zero profits in long run .       

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