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ECON MACRO 5th Edition by William McEachern
Edition 5ISBN: 978-1305631946ECON MACRO 5th Edition by William McEachern
Edition 5ISBN: 978-1305631946 Exercise 2
MONOPOLISTIC COMPETITION AND PERFECT COMPETITION COMPARED Illustrated below are the marginal cost and average total cost curves for a small firm that is in long-run equilibrium.
a. Locate the long-run equilibrium price and quantity if the firm is perfectly competitive.
b. Label the price and quantity p 1 and q 1.
c. Draw in a demand and marginal revenue curve to illustrate long-run equilibrium if the firm is monopolistically competitive. Label the price and quantity p 2 and q 2.
d. How do the monopolistically competitive firm's price and output compare to those of the perfectly competitive firm?
e. How do long-run profits compare for the two types of firms?
a. Locate the long-run equilibrium price and quantity if the firm is perfectly competitive.
b. Label the price and quantity p 1 and q 1.
c. Draw in a demand and marginal revenue curve to illustrate long-run equilibrium if the firm is monopolistically competitive. Label the price and quantity p 2 and q 2.
d. How do the monopolistically competitive firm's price and output compare to those of the perfectly competitive firm?
e. How do long-run profits compare for the two types of firms?
Explanation
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Perfect competition:
Perfect competitio...
ECON MACRO 5th Edition by William McEachern
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