MicroChapter11HW - Name: Date: Grade: Micro Chapter Eleven...

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Name: Date: Grade: Micro Chapter Eleven HW – Monopolistic Competition and Oligopoly 1. Which of the following goods and services are sold by firms in monopolistic competition? a. Cable television service b. Wheat c. Athletic shoes d. Soda e. Shaving cream f. Toothbrushes g. Ready-mix concrete Explain each of your selections. 2. The four-firm concentration ratio for audio equipment makers is 30 and for electric lamp makers is 89. TheHHI for audio equipment makers is 415 and for electric lamp makers is 2,850. Which of these markets is an example of monopolistic competition? 3, Figure 1 shows the demand curve, marginal revenue curve, and cost curves of Lite and Kool, Inc., a producer of running shoes in monopolistic competition. a. What quantity does Lite and Kool produce? b. What price does it charge? c. What is Lite and Kool's markup? d. How much profit does Lite and Kool make? e. Do firms in monopolistic competition always have excess capacity? f. Explain why Lite and Kool does or does not have excess capacity. g. Do you expect firms to enter the running shoes market or exit from that market in the long run? Explain your answer. 4. Jeb and George are discussing their respective businesses. Jeb says that there is no way he could lower his average total cost. He wouldn't be able to hold his costs to their current level if he either increased or decreased his production. George says that the level of demand frustrates him for his product and that he could cut his costs if only he could sell more. One of these people runs a diner, and the
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This note was uploaded on 05/18/2008 for the course ECON 251 taught by Professor Spencer during the Spring '08 term at Northampton Community College.

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MicroChapter11HW - Name: Date: Grade: Micro Chapter Eleven...

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