PRINT LASTNAME MONOPOLISTIC COMPETITION maximizing/loss-minimizing monopolistica

Question

PRINT LASTNAME MONOPOLISTIC COMPETITION maximizing/loss-minimizing monopolistically Use the graph below depieting a profit- competitive firm to answer questions 1 through 10. MC 10 ATC AVC MR Demand 0 400 800 1,200 Quantity The firm will produce 1) units of output and set price equal to 2S The firm's total revenue will equal 3) $ The firm's profit will equal 5s-- -. In the long run, the existence of 6) firms to 7)this market, resulting in 8) , and total cost will equal 4) economic profit is likely to cause positive/negative demand for increased/decreased enter/exit product price in response to the this firm's output. This firm will 9) raise/lower change in demand, and its profit will 10) rise/fall 284

Explanation / Answer

1) 800 units because equilibrium quantity is where MR = MC

2) $ 8 because equilibrium price is where intersection of MR and MC curves meets the demand curve.

3) TR = Price x Quantity = 8 x 800 = $ 6400

4) TC = 800 x 6 = $ 4800

5) Profit = TR - TC = 6400 - 4800 = $ 1600

6) Positive

7) enter

8) decreased

9) lower

10) fall

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