【正文】 firm in monopolistic petition and a monopoly firm face a downwardsloping demand curve.b. Both a firm in monopolistic petition and a monopoly firm have marginal revenue that is less than price.c. A firm in monopolistic petition faces the entry of new firms selling similar products.d. A monopoly firm earns economic profit in the long run.e. Both a firm in monopolistic petition and a monopoly firm equate marginal revenue and marginal cost.f. Neither a firm in monopolistic petition nor a monopoly firm produces the socially efficient quantity of output.5. a. The firm is not maximizing profit. For a firm in monopolistic petition, price is greater than marginal revenue. If price is below marginal cost, marginal revenue must be less than marginal cost. Thus, the firm should reduce its output to increase its profit.b. The firm may be maximizing profit if marginal revenue is equal to marginal cost. However, the firm is not in longrun equilibrium because price is less than average total cost. In this case, firms will exit the industry and the demand facing the remaining firms will rise until economic profit is zero.c. The firm is not maximizing profit. For a firm in monopolistic petition, price is greater than marginal revenue. If price is equal to marginal cost, marginal revenue must be less than marginal cost. Thus, the firm should reduce its output to increase its profit.d. The firm could be maximizing profit if marginal revenue is equal to marginal cost. The firm is in longrun equilibrium because price is equal to average total cost. Therefore, the firm is earning zero economic profit.6. a. Figure 4 illustrates the market for Sparkle toothpaste in longrun equilibrium. The profitmaximizing level of output is QM and the price is PM.Figure 4b. Sparkle39。s profit is zero, because at quantity QM, price equals average total cost.c. The consumer surplus from the purchase of Sparkle toothpaste is areas A + B. The efficient level of output occurs where the demand curve intersects the marginalcost curve, at QC. The deadweight loss is area C, the area above marginal cost and below demand, from QM to QC.d. If the government forced Sparkle to produce the efficient level of output, the firm would lose money because average total cost would exceed price, so the firm would shut down. If that happened, Sparkle39。s customers would earn no consumer surplus.7. a. As N rises, the demand for each firm’s product falls. As a result, each firm’s demand curve will shift left. b. The firm will produce where MR = MC: 100/N – 2Q = 2Q Q = 25/N c. 25/N = 100/N – P P = 75/N d. Total revenue = P 180。 Q = 75/N 180。 25/N = 1875/N2 Total cost = 50 + Q2 = 50 + (25/N)2 = 50 + 625/N2 Profit = 1875/N2 – 625/N2 – 50 = 1250/N2 – 50 e. In the long run, profit will be zero. Thus: 1250/N2 – 50 = 0 1250/N2 = 50 N = 58. Figure 5 shows the cost, marginal revenue and demand curves for the firm under both conditions.Figure 5 a. The price will fall from PMC to the minimum average total cost (PC) when the market bees perfectly petitive. b. The quantity produced by a typical firm will rise to QC, which is at the efficient scale of output. c. Average total cost will fall as the firm increases its output to the efficient scale. d. Marginal cost will rise as output rises. Marginal cost is now equal to price. e. Profit will not change. In either case, the market will move to longrun equilibrium where all firms will earn zero economic profit.9. a. A familyowned restaurant would be more likely to advertise than a familyowned farm because the output of the farm is sold in a perfectly petitive market, in which there is no reason to advertise, while the output of the restaurant is sold in a monopolistically petitive market.b. A manufacturer of cars is more likely to advertise than a manufacturer of forklifts because there is little difference between different brands of industrial products like forklifts, while there are greater perceived differences between consumer products like cars. The possible return to advertising is greater in the case of cars than in the case of forklifts.c. A pany that invented a very fortable razor is likely to advertise more than a pany that invented a less fortable razor that costs the same amount to make because the pany with the very fortable razor will get many repeat sales over time to cover the cost of the advertising, while the pany with the less fortable razor will not.10. a. Figure 6 shows Sleek’s demand, marginalrevenue, marginalcost, and averagetotalcost curves. The firm will maximize profit at an output level of Q * and a price of P *. The shaded are shows the firm’s profits.Figure 6b. In the long run, firms will enter, shifting the demand for Sleek’s product to the left. Its price and output will fall. Firms will enter until profits are equal to zero (as shown in Figure 7).Figure 7c. As consumers bee more focused on the stylistic differences in brands, they will be less focused on price. This will make the demand for each firm’s products more price inelastic. The demand curves may bee relatively steeper, allowing Sleek to charge a higher price. If these stylistic features cannot be copied, they may serve as a barrier to entry and allow Sleek to earn profit in the long run.d. A firm in monopolistic petition produces where marginal revenue is greater than zero. This means that firm must be operating on the elastic portion of its demand curve.169。 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in par