ustries under monopolistic competition have: A No barriers to entry B. Significa
ID: 1121120 • Letter: U
Question
ustries under monopolistic competition have: A No barriers to entry B. Significant barriers to entry C. Extremely high fixed cost D. Very strict regulations 33. Ind 34. Monopolistic competitors produce: A. Commodities B. Standardized products C. Differentiated products D. Inputs Figure #5-Monopolistic Competition Mc ATC 11 Quanti 35 (using the information in Figure #5). The profit maximizing level of output for this monopolistic competitor is: A. 1 C. 4 D. 6 (Using the information in Figure #5). The profit maximizing price for this monopolist is: A. $5 B. $7 C. $9 D. $11 36, 37, (using the information in Figure #5). In the short run, this monopolistic competitor is earning: A. Positive economic profit B. Negative economic profitExplanation / Answer
33 –a) In a monopolistic competition there is actually no barrier to entry, but generally the technology is rare and the cost of production may be very high in short run leading to difficulties.
34- c) monopolistic competition provides differentiated product, the products in the competition are generally similar, but are differentiated by well established marketting policy and advertisement.
35 – b) the profit maximizing level of output is 3 , where MR =MC , i.e marginal revenue is equal to marginal cost
36 -c) the firm will generally charge a price where MR = MC and a vertical line from that point intersects the demand curve then a horizontal line from that point intersects the price line and the price is rs9
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