
Economics Economics Forum  Financial Mathematics, Econometrics, Operations Research, Mathematical Finance, Computational Finance 
 LinkBack  Thread Tools  Display Modes 
February 23rd, 2012, 09:18 AM  #1 
Newbie Joined: Feb 2012 Posts: 3 Thanks: 0  please help me: monopolistically competitive market
Can some one kindly help me verify the answers for the below questions. This figure depicts a situation in a monopolistically competitive market. (the graph is attached) [attachment=0:c0znq8ss]Q5.png[/attachment:c0znq8ss] i. What price will the monopolistically competitive firm charge in this market? ii. What are the profitmaximizing price, quantity, and resulting profit? iii. How much consumer surplus will be derived from the purchase of this product at the monopolistically competitive price? iv. How much profit will the monopolistically competitive firm earn in this situation? v. How much output will the monopolistically competitive firm produce in this situation? My answers are i: 75 ii: price80, qty 20, profit (80 x 20) – (70 x 20) = 200 iii: (80 – 75) = 5 iv: (75 x 25) – (75 x 25) = 0 v: 25 units Thank you 
March 12th, 2012, 10:51 AM  #2 
Member Joined: Sep 2010 Posts: 63 Thanks: 0  Re: please help me: monopolistically competitive market
i. Is wrong because based on the demand curve the firm can charge more then that if only 20 units of the good are produced. We expect 20 unites to produce because that is where marginal cost equals marginal revenue. ii. Looks good. iii. I think for this one you should be looking for the intersection of the demand curve with the ATC curve. Regardless your Marginal cost curve looks like it is drawn wrong on the graph as the average total cost should be the integral of the marginal cost divided by the quantity produced. iv and v are both wrong. 

Tags 
competitive, market, monopolistically 
Thread Tools  
Display Modes  

Similar Threads  
Thread  Thread Starter  Forum  Replies  Last Post 
Monopoly Market (multiple steps)  Isaikk  Economics  1  February 21st, 2014 12:08 PM 
Competitive fringe Economics Calculus question Please Help?  jadenb11  Economics  0  April 18th, 2011 04:57 PM 
In the luxury market has not matured  The Chaz  Real Analysis  0  September 16th, 2010 08:44 PM 
Spot and forward rates (bond market)  triptrap  Economics  0  June 26th, 2009 10:23 AM 
stock market probability  medc  Advanced Statistics  2  February 27th, 2009 07:49 AM 