Create an Account

Already have account?

Forgot Your Password ?

Home / Questions / Draw an example of a firm in monopolistic competition that is earning an economic

Draw an example of a firm in monopolistic competition that is earning an economic

 Draw an example of a firm in monopolistic competition that is earning an economic profit. Besure to label all the curves. Indicate the area that equals the firm’s economic profit.b) Explain the adjustment process in the industry that will lead into long run equilibrium. Draw anew diagram showing the firm in a long run monopolistic competitive equilibrium.Question 2Shower Power, Inc., a firm in monopolistic competition, produces shower radios. The company’seconomists know that it can sell no radios at $80, and for each $10 cut in price, the quantity of radios itcan sell increases by 50 a day. This relationship continues to hold until the price falls to $20. The firm’stotal fixed cost is $3,000 a day. Its marginal cost is constant at $20 per radio.a) Draw the demand curve faced by the firm and its marginal revenue curve. Also draw Shower Power’smarginal cost and average total cost curves.b) What quantity of radios should Shower Power produce to maximize its profit? What price should itcharge?c) What is the firm’s short-run economic profit or loss?d) In the long run, what will happen to the demand for Shower Power’s radios, the quantity of radiossold, the price charged, and the firm’s economic profit?’

Mar 16 2020 View more View Less

Answer (UnSolved)

question Get Solution

Related Questions