MC ATC MR 10 20 30 40 50 Output per day Refer to the graph above. If the firm se
ID: 1119452 • Letter: M
Question
MC ATC MR 10 20 30 40 50 Output per day Refer to the graph above. If the firm secks to maximize profit, it should set a price equal to: a. $10. b. $8 d. S4. MC ATC P 25, 0 0 Refer to the above graphs for a competitive market in the short run. What will happen in the long run to industry supply and the equilibrium price of the product? a. Supply will decrease, price will decrease b. Supply will increase, price will decrease c. Supply will decrease, price will increase d. Supply will increase, price will increase 26. At long-run equilibrium in monopolistic competition, there is: a. Allocative efficiency . Productive efficiency Both allocative and productive efficiency Neither allocative nor productive efficiencyExplanation / Answer
Ans)
24.
b. $8
The profit maximization rule is to produce where Mc equlas MR.Thus ,the firm should produce 30 units of output per day and charge a price of 8.
25.
c.Supply will decrease price will increase
The firm is making a loss in the short run therefore in the long run some firms will exit the market.This wil happen till loses are eliminated and price is increased such that the industry is earning zero economic profits.
26.
d. Neither allocative nor productive efficiency
A monopolistic competitive firm produces less and charges more even in the long run than a perfectly comeptitive firm.It thus has neither allocative nor productive effficiency.It is inefficient.
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