For first graph just need a point for each to graph it. For fill ins: 1. (more t
ID: 1132538 • Letter: F
Question
For first graph just need a point for each to graph it.
For fill ins:
1. (more than, same as, less than)
2.same as one
3.decreased deadweight loss hypothesis, excessive production theory of comp, excess capacity theorem of monopolistic comp
Suppose that a firm produces tennis racquets in a monopolistically competitive market. The following graph shows its demand (D) curve, marginal revenue (MR) curve, marginal cost (MC) curve, and long-run average total cost (LRATC) curve. Assume that all firms in the industry face the same cost structure Place the tan point (dash symbol) on the graph to indicate the long-run monopolistically competitive equilibrium price and quantity for this firm. Next, place the purple point (diamond symbol) to indicate the point at which this firm would produce in the long run if it operated in a perfectly competitive market. Note: Dashed drop lines will automatically extend to both axes 100 Monopolistic Competition Outcome Perfect Competition Outcome 30 10 MR 0 10 20 3040 50 60 70 890 100 QUANTITY (Thousands of racquets)Explanation / Answer
Ans
Tan point is at meeting of LATc and D curve
Purple point is pint on lRAC which corresponds to meeting of Mc and D curve
Monopolistic....... Average cost 50 production level 30 thousand
Perfect competition .......... 45,40
More than as shown above
Less than
Excessive capacity theorem says in monopolistic competition output is less than in perfect competition
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