The characteristics of a monopolistically competitive market and the impact of new and improved product on the equilibrium quantity and price.

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Answer 1

Question

Chapter 12, Problem 1RQ

To determine

The characteristics of a monopolistically competitive market and the impact of new and improved product on the equilibrium quantity and price.

Expert Solution & Answer

Explanation of Solution

The monopolistically competitive market is a type of market with the characteristics of both the monopoly and competition. There will be many sellers but each one will be selling the differentiated products in the market. This means that the degree of substitution will be higher between the sellers but not the perfect substitutes. The main characteristics of the monopolistic competition are as follows:

1. The firms competes with each other through selling the differentiated products. The products will be differentiated in their color, smell, shape, and size but the products will be close substitutes for each other firm but not the perfect substitutes.

2. There will be freedom of entry and exit from the market. Even though the producers sell the differentiated products and the prices are different, there is freedom of entry into the market and freedom of exit from the market on the basis of the economic profit prevailing in the market.

When the market witnesses an introduction of a new product or the improved product in the market, the consumers will be attracted toward the new products and as a result of the new trend set by the new product, the demand for the existing goods will fall in the market.

Economics Concept Introduction

Monopolistic competition: The monopolistic competition market is the market structure where there many sellers selling differentiated but close substitutes in the market. There will be freedom of entry and exit from the market.

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Students have asked these similar questions

What will be the economic profit or loss for this monopolistically competitive firm at the profit-maximizing level of output?

How is the perceived demand curve for a monopolistically competitive firm different from the perceived demand curve for a monopoly or a perfectly competitive firm? Why?

The following graph represents a monopolistically competitive firm in long-run equilibrium. Place the black point (cross sign) on the graph to indicate the short-run profit-maximizing price and quantity for this monopolistically competitive company. Next, place the grey star on the graph to indicate the point where the LRAC reaches a minimum. PRICE PER UNIT (Dollars) 500 450 400 350 300 250 200 150 100 50 MC 0 0 50 LRAC MR Demand 100 150 200 250 300 350 400 450 500 QUANTITY (Units) Monopolistically Competitive Outcome Minimum of the LRAC The long-run equilibrium price is $ (Hint: Use the graph to find the numeric value of the price at equilibrium.) The long-run equilibrium quantity is units. The LRAC curve is at its minimum at a quantity of The long-run equilibrium price is units. the marginal cost of producing the equilibrium output. ?

Answer 2

Question

Chapter 12, Problem 1RQ

To determine

The characteristics of a monopolistically competitive market and the impact of new and improved product on the equilibrium quantity and price.

Expert Solution & Answer

Explanation of Solution

The monopolistically competitive market is a type of market with the characteristics of both the monopoly and competition. There will be many sellers but each one will be selling the differentiated products in the market. This means that the degree of substitution will be higher between the sellers but not the perfect substitutes. The main characteristics of the monopolistic competition are as follows:

1. The firms competes with each other through selling the differentiated products. The products will be differentiated in their color, smell, shape, and size but the products will be close substitutes for each other firm but not the perfect substitutes.

2. There will be freedom of entry and exit from the market. Even though the producers sell the differentiated products and the prices are different, there is freedom of entry into the market and freedom of exit from the market on the basis of the economic profit prevailing in the market.

When the market witnesses an introduction of a new product or the improved product in the market, the consumers will be attracted toward the new products and as a result of the new trend set by the new product, the demand for the existing goods will fall in the market.

Economics Concept Introduction

Monopolistic competition: The monopolistic competition market is the market structure where there many sellers selling differentiated but close substitutes in the market. There will be freedom of entry and exit from the market.

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Answer 3

Question

Chapter 12, Problem 1RQ

To determine

The characteristics of a monopolistically competitive market and the impact of new and improved product on the equilibrium quantity and price.

Expert Solution & Answer

Explanation of Solution

The monopolistically competitive market is a type of market with the characteristics of both the monopoly and competition. There will be many sellers but each one will be selling the differentiated products in the market. This means that the degree of substitution will be higher between the sellers but not the perfect substitutes. The main characteristics of the monopolistic competition are as follows:

1. The firms competes with each other through selling the differentiated products. The products will be differentiated in their color, smell, shape, and size but the products will be close substitutes for each other firm but not the perfect substitutes.

2. There will be freedom of entry and exit from the market. Even though the producers sell the differentiated products and the prices are different, there is freedom of entry into the market and freedom of exit from the market on the basis of the economic profit prevailing in the market.

When the market witnesses an introduction of a new product or the improved product in the market, the consumers will be attracted toward the new products and as a result of the new trend set by the new product, the demand for the existing goods will fall in the market.

Economics Concept Introduction

Monopolistic competition: The monopolistic competition market is the market structure where there many sellers selling differentiated but close substitutes in the market. There will be freedom of entry and exit from the market.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 12, Problem 1RQ

To determine

The characteristics of a monopolistically competitive market and the impact of new and improved product on the equilibrium quantity and price.

Expert Solution & Answer

Explanation of Solution

The monopolistically competitive market is a type of market with the characteristics of both the monopoly and competition. There will be many sellers but each one will be selling the differentiated products in the market. This means that the degree of substitution will be higher between the sellers but not the perfect substitutes. The main characteristics of the monopolistic competition are as follows:

1. The firms competes with each other through selling the differentiated products. The products will be differentiated in their color, smell, shape, and size but the products will be close substitutes for each other firm but not the perfect substitutes.

2. There will be freedom of entry and exit from the market. Even though the producers sell the differentiated products and the prices are different, there is freedom of entry into the market and freedom of exit from the market on the basis of the economic profit prevailing in the market.

When the market witnesses an introduction of a new product or the improved product in the market, the consumers will be attracted toward the new products and as a result of the new trend set by the new product, the demand for the existing goods will fall in the market.

Economics Concept Introduction

Monopolistic competition: The monopolistic competition market is the market structure where there many sellers selling differentiated but close substitutes in the market. There will be freedom of entry and exit from the market.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 12, Problem 1RQ

To determine

The characteristics of a monopolistically competitive market and the impact of new and improved product on the equilibrium quantity and price.

Expert Solution & Answer

Explanation of Solution

The monopolistically competitive market is a type of market with the characteristics of both the monopoly and competition. There will be many sellers but each one will be selling the differentiated products in the market. This means that the degree of substitution will be higher between the sellers but not the perfect substitutes. The main characteristics of the monopolistic competition are as follows:

1. The firms competes with each other through selling the differentiated products. The products will be differentiated in their color, smell, shape, and size but the products will be close substitutes for each other firm but not the perfect substitutes.

2. There will be freedom of entry and exit from the market. Even though the producers sell the differentiated products and the prices are different, there is freedom of entry into the market and freedom of exit from the market on the basis of the economic profit prevailing in the market.

When the market witnesses an introduction of a new product or the improved product in the market, the consumers will be attracted toward the new products and as a result of the new trend set by the new product, the demand for the existing goods will fall in the market.

Economics Concept Introduction

Monopolistic competition: The monopolistic competition market is the market structure where there many sellers selling differentiated but close substitutes in the market. There will be freedom of entry and exit from the market.

Answer 6

Chapter 12, Problem 1RQ

To determine

The characteristics of a monopolistically competitive market and the impact of new and improved product on the equilibrium quantity and price.

Expert Solution & Answer

Explanation of Solution

The monopolistically competitive market is a type of market with the characteristics of both the monopoly and competition. There will be many sellers but each one will be selling the differentiated products in the market. This means that the degree of substitution will be higher between the sellers but not the perfect substitutes. The main characteristics of the monopolistic competition are as follows:

1. The firms competes with each other through selling the differentiated products. The products will be differentiated in their color, smell, shape, and size but the products will be close substitutes for each other firm but not the perfect substitutes.

2. There will be freedom of entry and exit from the market. Even though the producers sell the differentiated products and the prices are different, there is freedom of entry into the market and freedom of exit from the market on the basis of the economic profit prevailing in the market.

When the market witnesses an introduction of a new product or the improved product in the market, the consumers will be attracted toward the new products and as a result of the new trend set by the new product, the demand for the existing goods will fall in the market.

Economics Concept Introduction

Monopolistic competition: The monopolistic competition market is the market structure where there many sellers selling differentiated but close substitutes in the market. There will be freedom of entry and exit from the market.

Answer 7

Chapter 12, Problem 1RQ

To determine

The characteristics of a monopolistically competitive market and the impact of new and improved product on the equilibrium quantity and price.

Answer 8

Expert Solution & Answer

Explanation of Solution

The monopolistically competitive market is a type of market with the characteristics of both the monopoly and competition. There will be many sellers but each one will be selling the differentiated products in the market. This means that the degree of substitution will be higher between the sellers but not the perfect substitutes. The main characteristics of the monopolistic competition are as follows:

1. The firms competes with each other through selling the differentiated products. The products will be differentiated in their color, smell, shape, and size but the products will be close substitutes for each other firm but not the perfect substitutes.

2. There will be freedom of entry and exit from the market. Even though the producers sell the differentiated products and the prices are different, there is freedom of entry into the market and freedom of exit from the market on the basis of the economic profit prevailing in the market.

When the market witnesses an introduction of a new product or the improved product in the market, the consumers will be attracted toward the new products and as a result of the new trend set by the new product, the demand for the existing goods will fall in the market.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Economics Concept Introduction

Monopolistic competition: The monopolistic competition market is the market structure where there many sellers selling differentiated but close substitutes in the market. There will be freedom of entry and exit from the market.

Answer 12

Ch. 12 - Prob. 1RQ Ch. 12 - Prob. 2RQ Ch. 12 - Prob. 3RQ Ch. 12 - Prob. 4RQ Ch. 12 - Prob. 5RQ Ch. 12 - Prob. 6RQ Ch. 12 - Prob. 7RQ Ch. 12 - Prob. 8RQ Ch. 12 - Prob. 9RQ Ch. 12 - Prob. 10RQ

The characteristics of a monopolistically competitive market and the impact of new and improved product on the equilibrium quantity and price.

The characteristics of a monopolistically competitive market and the impact of new and improved product on the equilibrium quantity and price.

Explanation of Solution

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