(Solved): 4. Is monopolistic competition efficient? Suppose that a company operate: The monopolistically comp ...

4. Is monopolistic competition efficient? Suppose that a company operate: The monopolistically competilive market for rugby kits. The following graph shows the demand curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve for the firm, Place a black paint (plus symbol) on the graph to indicate the fong-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. Because this market is monopolistically competitive, you can tell that it is in long-run equilibrlum by the fact that quantity for each firm. Further, a monopolistically competitive firm's average total cost in long-run equilibrium is average total cost. at the optimal the minimum True or False: This indicates that there is excess capacity in the market for kits. True False Monopolistically competitive markets may be socially inefficient due to the presence of too many or too few firms. The presence of the externality implies that there is too much entry of new firms in the market. in long-run equilibrium by the fact that \( P=A T C \) at the 0 age total cost in long-run equilibrium is the \[ \begin{array}{l} P>A T C \\ M R=M C \\ M R>M C \\ P=A T C \end{array} \] the presence of too many or too few firms. The presence of the of new firms in the market. ong-run equilibrium by the fact that \( P=A T C- \) at the optimal cotal cost in long-run equilibrium is the minimum \begin{tabular}{|l|} \hline equal to \\ \hline greater than \\ \hline less than \\ \hline \end{tabular} Because this market is monopolistically competitive, you can quantity for each firm. Further, a monopolistically competitive average total cost. True or False: This indicates that there is excess capacity in the True petitive markets may be socially inefficient d externality implies that there is too muc