please help Blank spot #1 Blank spot #2 Suppose that a firm produces wooden trai
ID: 1193339 • Letter: P
Question
please help Blank spot #1Blank spot #2
Suppose that a firm produces wooden train engines in a monopolistically competitive market. The following graph shows its demand curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve. Place a black point (plus symbol) on the graph to indicate the long-run monopolistically competitive equilibrium price and quantity for this firm. Next, place a grey point (star symbol) to indicate the minimum average total cost the firm faces and the quantity associated with that cost 100 90 80 70 60 50 Mon Comp Ouoe Mn Unit Cost 30 10 0 10 20 30 40 0 60 0 80 100 QUANTITY (Thousands of engines) Because this market is a monopolistically competitive market, you can tell that it is in long-run equilibrium by the fact thatat the optimal quantity. Furthermore, a monopolistically competitive firm's average total cost in long-run equilibrium is the minimum average total cost. True or False: This indicates that there is excess capacity in the market for engines. O True Faise
Explanation / Answer
Equilbirum condition : MR=MC
In long run Average cost is Greater than Average minimum cost.
True There is excess capacity due to fact that monopolistic firm operates even before the minimum Average cost.
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