87)Answer:TrueFalseDiff: 1Page Ref: 438-439/438-439Topic: Monopolistic Competition in the Long RunLearning Outcome: Micro 15: Discuss the role of differentiation in monopolistic competition in comparison toother market conditionsAACSB: Reflective ThinkingSHORT ANSWER. Write the word or phrase that best completes each statement or answers the question.88) What is the difference between zero accounting profit and zero economic profit?88)Answer: Economic profits take into account opportunity costs. Accounting profits do not. So,economic profits will typically be smaller than accounting profits. If a firm has zeroaccounting profits, it will be making an economic loss, while a firm with zeroeconomic profits will have positive accounting profits.Diff: 1Page Ref: 438/438Topic: Accounting Profit and Economic ProfitLearning Outcome: Micro 1: Identify the basic principles of economics and explain how to think likean economistAACSB: Reflective Thinking29
Figure 13-889)Refer to Figure 13-8 to answer the following questions.a. What is the profit-maximizing output level?b. What is the profit-maximizing price?c. What is the average total cost at the profit-maximizing output level?d. What area represents the firmʹs profit?e. At which output level are economies of scale exhausted?f. Does this graph most likely represent the long run or the short run? Why?89)Answer: a. The profit maximizing level of output isQ4.b. The profit-maximizing price isP4.c. TheATCat the profit-maximizing output level isP2.d. The firmʹs profit is represented by areaP2P4ed.e. Economies of scale are exhausted at outputQ3.f. Since the graph displays a profit, it most likely represents the short run.Diff: 2Page Ref: 438-439/438-439Topic: Profit in the Short RunLearning Outcome: Micro 15: Discuss the role of differentiation in monopolistic competition incomparison to other market conditionsAACSB: Analytic Skills30
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