Suppose a monopolistic competitor and long-run equilibrium has a constant marginal cost of six dollars and faces the demand curve given in the following table: Price Quantity 14 2 12 4 10 6 8 8 6 10 4 12 2 14 0 16 A. What output will the firm choose? B. What will the monopolistic competitor's average fixed cost at the output it chooses?
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The following table shows the cost data and demand schedule for a typical firm producing board games in a monopolistically competitive market in the short run.
Fill in the values in the Total Revenue, Marginal Revenue, and Marginal Cost columns in the following table and then answer the questions that follow.
|
Quantity |
Price |
Total Cost |
Total Revenue |
Marginal Revenue |
Marginal Cost |
Average Total Cost |
|---|---|---|---|---|---|---|
|
(Board games) |
(Dollars per game) |
(Dollars per day) |
(Dollars per day) |
(Dollars) |
(Dollars) |
(Dollars) |
| 1 | $16 | $12 | ||||
| 2 | $14 | $18 | ||||
| 3 | $10 | $21 | ||||
| 4 | $8 | $24 | ||||
| 5 | $6 | $35 | ||||
| 6 | $4 | $48 | ||||
| 7 | $4 | $63 | ||||
| 8 | $4 | $80 |
Under monopolistic competition, a typical firm will produce board games at a price of per board game in the short run.
Based on your calculations, the firm will.
Fill in the Average Total Cost column in the previous table.
Based on your calculations, the level of excess capacity in this monopolistically competitive market is
The following table shows the cost data and demand schedule for a typical firm producing board games in a monopolistically competitive market in the short run.
Fill in the values in the Total Revenue, Marginal Revenue, and Marginal Cost columns in the following table and then answer the questions that follow.
|
Quantity |
Price |
Total Cost |
Total Revenue |
Marginal Revenue |
Marginal Cost |
Average Total Cost |
|---|---|---|---|---|---|---|
|
(Board games) |
(Dollars per game) |
(Dollars per day) |
(Dollars per day) |
(Dollars) |
(Dollars) |
(Dollars) |
| 1 | $16 | $12 | ||||
| 2 | $14 | $18 | ||||
| 3 | $10 | $21 | ||||
| 4 | $8 | $24 | ||||
| 5 | $6 | $35 | ||||
| 6 | $4 | $48 | ||||
| 7 | $4 | $63 | ||||
| 8 | $4 | $80 |
Under monopolistic competition, a typical firm will produce _____________ board games at a price of ____________ per board game in the short run.
Based on your calculations, the firm will
earn a profit of $28
earn zero profit (break-even)
earn a profit of $10
suffer an economic loss of $10
Fill in the Average Total Cost column in the previous table.
Based on your calculations, the level of excess capacity in this monopolistically competitive market is
1 board game
3 board games
4 board games
5 board games
2 board game
This table shows the demand schedule, marginal cost, and average total cost for a monopolistically competitive firm.
|
Quantity |
Price |
Marginal Cost |
Average Total Cost |
|
0 |
$50 |
-- |
-- |
|
1 |
$45 |
$30 |
$40 |
|
2 |
$40 |
$24 |
$32 |
|
3 |
$35 |
$14 |
$26 |
|
4 |
$30 |
$10 |
$22 |
|
5 |
$25 |
$12 |
$20 |
|
6 |
$20 |
$32 |
$22 |
|
7 |
$15 |
$50 |
$26 |
|
8 |
$10 |
$74 |
$32 |
|
9 |
$5 |
$104 |
$40 |
|
10 |
$0 |
$140 |
$50 |
Refer to Table 16-4. How much profit will this firm earn when it chooses its output to maximize profit?
| a. |
an $8 profit |
|
| b. |
a $12 loss |
|
| c. |
a $25 profit |
|
| d. |
a $32 profit |
