Question 15 The graph shows the marginal cost curve, average total cost curve, demand curve, and marginal revenue curve of a firm in monopolistic competition in long-run equilibrium. Draw a point at the firm's profit-maximizing output and price. Label it 1. Draw a point to show the firm's efficient scale and its average total cost at that output. Label it 2. Draw a horizontal arrow that indicates the firm's excess capacity. Label it. Price and cost (dollars per pair) 50- 40- 30- 20- 10- 0- MR D 100 50 150 Quantity (pairs of blue jeans per day) MC ATC 200
Question 15 The graph shows the marginal cost curve, average total cost curve, demand curve, and marginal revenue curve of a firm in monopolistic competition in long-run equilibrium. Draw a point at the firm's profit-maximizing output and price. Label it 1. Draw a point to show the firm's efficient scale and its average total cost at that output. Label it 2. Draw a horizontal arrow that indicates the firm's excess capacity. Label it. Price and cost (dollars per pair) 50- 40- 30- 20- 10- 0- MR D 100 50 150 Quantity (pairs of blue jeans per day) MC ATC 200
Chapter14: Monopolistic Competition And Product Differentiation
Section: Chapter Questions
Problem 10P
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