Question

3. Monopoly and Monopolistic Competition (20 points) 4. Construct the following curves on the same graph, assuming that the firm is a monopolist: Average Total Cost, Marginal Cost, the Demand Curve (Average Revenue), and the Marginal Revenue Curve. Indicate an equilibrium in which the firm earns an economic profit, and indicate this profit on your graph. Is it possible for this profit to persist beyond the short run? Is this firm guaranteed a profit beyond the short run? Explain. b. Repeat the above exercise, assuming that the firm operates under conditions of monopolistic competition (the Demand Curve should be flatter than that of the monopolist). Indicate that the firm is earning zero economic profit, and explain why this firm can expect this level of profit over the long run.

          3. Monopoly and Monopolistic Competition (20 points)
4. Construct the following curves on the same graph, assuming that the firm is
a monopolist: Average Total Cost, Marginal Cost, the Demand Curve (Average
Revenue), and the Marginal Revenue Curve. Indicate an equilibrium in which
the firm earns an economic profit, and indicate this profit on your graph. Is
it possible for this profit to persist beyond the short run? Is this firm
guaranteed a profit beyond the short run? Explain.
b. Repeat the above exercise, assuming that the firm operates under conditions
of monopolistic competition (the Demand Curve should be flatter than that
of the monopolist). Indicate that the firm is earning zero economic
profit, and explain why this firm can expect this level of profit over the
long run.

3. Monopoly and Monopolistic Competition (20 points)
4. Construct the following curves on the same graph, assuming that the firm is
a monopolist: Average Total Cost, Marginal Cost, the Demand Curve (Average
Revenue), and the Marginal Revenue Curve. Indicate an equilibrium in which
the firm earns an economic profit, and indicate this profit on your graph. Is
it possible for this profit to persist beyond the short run? Is this firm
guaranteed a profit beyond the short run? Explain.
b. Repeat the above exercise, assuming that the firm operates under conditions
of monopolistic competition (the Demand Curve should be flatter than that
of the monopolist). Indicate that the firm is earning zero economic
profit, and explain why this firm can expect this level of profit over the
long run.

Added by Timothy G.

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