please help First blank spot A. Negative B. Positive C. Zero Second blank spot A

Question

please help First blank spot A. Negative B. Positive C. Zero
Second blank spot A. An equal number of B. Fewer C. More
Fantastique Bikes is a company that manufactures bikes in a monopolistically competitive market. The following graph shows Fantastique's demand curve, marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC). Place the black point (plus symbol) on the graph to indicate the short-run profit-maximizing price and quantity for this monopolistically competitive company. Then, use the green rectangle (triangle symbols) to shade the area representing the company's profit or loss 500 450 Manopolistically Compebitive Outcome 400 350 300 250 w 200 150 Profit or Loss 100 50 MR 0 50 100 150 200 250 300 350 400 450 500 QUANTITY (Bikes) Given the profit-maximizing choice of output and price, the shop is making which means there are equilibrium. profit, shops in the industry relative to the long-run

Explanation / Answer

Since ATC is above demand curve(price line) for any level of output, there will be loss at all levels. There are negative profits. Hence there are more number of shops in the industry.

In long run all market face zero profts where average total cost equals the price line. The following statemenst hold true for both monopoly and monopolistic competition:

Firms earn zero profit in the long run

Price equals average total cost in long run

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