58 869
Assignments Done
Successfully Done
In March 2018
Your physics homework can be a real challenge, and the due date can be really close — feel free to use our assistance and get the desired result.
Be sure that math assignments completed by our experts will be error-free and done according to your instructions specified in the submitted order form.
Our experts will gladly share their knowledge and help you with programming homework. Keep up with the world’s newest programming trends.

Answer on Economics of Enterprise Question for Ann

Question #31304
2, The following graph shows a firm in a monopolistically competitive industry.
a. Show the firm's short-run profit-maximizing quantity and price. Is the firm making a profit? (See attachment for Graph F)

b. Carefully explain what will happen in the industry over time, and draw a graph of a

monopolistically competitive firm in lon-run equilibrium.

Expert's answer
In the long run, monopoly competitive firms will earn zero profit.

When existing firms in an industry make profits, it encourages other firms to
enter the market. As a result, the demand from each firm decreases because
consumers have more products to choose from.
When existing firms make losses, other firms exit the market, and the demand curve shifts to the right. The remaining firms see increasing profits.
Exit and entry continues until long run equilibrium is reached. At this point,firms are making zero profit, and there is no incentive to enter or exit the
Price minus average total cost equals profit per unit. Maximum profit is zero only when the average total cost curve is tangent to the demand curve. This
tangent point occurs at the exact quantity where MR=MC.
Like in a monopoly market, a monopolistic competitor sells at a price that exceeds marginal cost. Like in a competitive market, price equals average total
cost because entry and exit push the profit to zero.
Monopolies can earn profit in the long run, but the long run profit for monopolistic competitors is zero because of free entry and exit.

Need a fast expert's response?

Submit order

and get a quick answer at the best price

for any assignment or question with DETAILED EXPLANATIONS!


No comments. Be first!

Leave a comment

Ask Your question