Monopolistic Competition s. Perfect Competition MC ATC P. I MR 8 Quantity The mo
ID: 1121833 • Letter: M
Question
Monopolistic Competition s. Perfect Competition MC ATC P. I MR 8 Quantity The monopolistically competitive firm in the above figure will maxi- mize profits (or minimize losses) by producing 2 and charging a price Ps and charging a price Pl. c. 22 and charging a price P2 d. Qs and charging a price Ps e. 24 and charging a price Ps The profit per unit of output for the firm in the above figure is a. P6-P b. P6-P5. c. P3-P2. c. Not enough information has been given. A perfectly competilive outcome in the above figure would exist at a rc ace oard an o u put level of a. P6 and an output level of Q2. b. P4 and an output level of Q4. c. Ps and an ouiput level of Q d- 7, and an output level of Q1. e. Ps and an output level of Q3. --The firm in the above figure compared to perfect compelton 7's a. underproduces an amount equal to Q4-03. b. overproduces an amount equal to Q:-21 c. underproduces an amount equal to 23-2 . d. underproduces an amount equal to 22-21 e. overproduces an amount equal to 24-23 In the long run, a monopolistically competitive market will a. not produce at minimum long-run ATC. b. charge a lower price than if the market was perfectly competitive. c. produce in the range of diseconomies of scale. d. tend to incur losses. e. produce too much and use too many resources relative to a per feculy competitive marketExplanation / Answer
22. A. A monopolistically competitive firm maximises profit where marginal revenue is same as marginal cost. Price is determined at the demand curve.
23.a. P6-p2. Profit per unit is the gap between price and average cost.
24. E. Under perfect competition, P=AR= MR. Mc intersect demand curve, AR at Q3.
25. C. Q3-Q2 . Monopolistically competitive firms produces less than as under perfect competition.
26.a. minimum point of average cost curve is the most efficient point which is attained only in perfect competition.