Suppose the figure to the right represents the market for a particular brand of

Question

Suppose the figure to the right represents the market for a particular brand of shampoo, such as L'Oreal, Lancome Assume the market is monopolistically competitive and is in long-run equilibrium How much excess capacity does the firm have? The monopolistically competitive firm's excess capacity is thousand bottles of , or Maybelline 2.00 1.80 1.60 1.40 1.20 1.00 2 0.80 0.60 0.40 0.20 0.00 MC ATC shampoo. (Enter your response as an integer.) MR 0 2 4 6 8 10 12 14 16 18 20 Quantity (shampoo bottles in thousands)

Explanation / Answer

The monopolistically competitive firm's excess capacity is 2 thousands bottles of shampoo.

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