Identify the short-run equilibrium of a monopolistically competitive firm. Point

Question

Identify the short-run equilibrium of a monopolistically competitive firm. Points D and D Points C and C Points B and B Points A and A At that equilibrium, what is: Instructions: Enter your responses to the nearest whole number. Price? Output? Total Profit? Identify the long-run equilibrium of the same firm. Points C and C Points B and B Points A and A OPoints D and D In long-run equilibrium, what is Price? Output? units Total profit? profit Assume an oligopolist confronts two possible demand curves for its own output, as illustrated below. The first By how much does quantity demanded increase if price is reduced from $11 to $9 and Instructions: Enter your responses to the nearest whole number. Rivals match price cut? Rivals dont match price cut? By how much does quantity demanded decrease when price is raised from $11 to $13 and Rivals match price hike? Rivals dont match price hike?

Explanation / Answer

a) A and A'

b) Price 12

c) output 6

total profit = 12*6-8*6 = $24

In long run equilibrium

i) B and B'

ii) output = 5 unit

iii) TOtal profit = 0

a)

1) if rival match price cut, quantity increased by 4 unit

2) if rival do not match price cut, quantity increased by 1 unit

b)

1) 4 unit

2) 1 unit

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