Suppose that the men\'s suit business is monopolistically competitive. It follow

Question

Suppose that the men's suit business is monopolistically competitive. It follows that in equilibrium, the marginal revenue of any firm in the industry:

is greater than the price. is equal to the price. is less than the price. has no relation to price.






The difference between a monopolist and a monopolistic competitor is that:

a monopolist equates marginal revenue and marginal cost while a monopolistic competitor equates price and marginal cost. the average total cost curve of a monopolistic competitor is tangent to the demand curve in long-run equilibrium, but the average total cost curve of a monopolist can be in a position below the price in long-run equilibrium. the average total cost curve of a monopolist is tangent to the demand curve in long-run equilibrium, but the average total cost curve of a monopolistic competitor can be in a position below the price in long-run equilibrium. the average total cost curve of a monopolist is tangent to the demand curve in long-run equilibrium, but the average total cost curve of a monopolistic competitor can be in a position above the price in long-run equilibrium.







Refer to the graph above. To maximize profit, the monopolistically competitive firm represented by this graph will produce:

Q1 and set price equal to P1. Q1 and set price equal to P3. Q1 and set price equal to P4. Q2 and set price equal to P2.











Refer to the graph above. If this monopolistically competitive firm maximizes profit it will:

charge $45 per dress. charge $78 per dress. charge $85 per dress. shutdown because it cannot cover its opportunity costs.








Refer to the graph above. If this graph represents a competitive market, then the equilibrium price and quantity will be:

$13.50 and 325, respectively. $7 and 325, respectively. $10 and 500, respectively.










Refer to the graph above. If this monopolist were allowed to choose the profit-maximizing level of output, it would produce:

125 units of output. 200 units of output. 400 units of output. 450 units of output.












Refer to the graph above. Suppose the industry is currently perfectly competitive but is then taken over by a monopolist. Assuming that the monopolist maximizes profit:

the price of computers will increase from $400 to $600 but there will be no change in quantity demanded. the price of computers will increase from $400 to $600 and the quantity demanded will fall from 400 to 200. the price of computers will be set equal to the marginal cost of computers. there will be no effect on the price of computers.

Explanation / Answer

1.

2.

the average total cost curve of a monopolistic competitor is tangent to the demand curve in long-run equilibrium, but the average total cost curve of a monopolist can be in a position below the price in long-run equilibrium.

3.

Q1 and set price equal to P4.

4.

charge $85 per dress.

5.

$7 and 750, respectively.

6.

200 units of output.

7.

the price of computers will increase from $400 to $600 and the quantity demanded will fall from 400 to 200.

is less than the price.

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