restaurant can raise its price without losing all of its buyers because it is selling a product that is notidentical to the products sold by other restaurants.Diff: 2Page Ref: 432/432Topic: Demand and Marginal RevenueLearning Outcome: Micro 15: Discuss the role of differentiation in monopolistic competition in comparison to other marketconditionsAACSB: Reflective Thinking8
32) Suppose that if a local McDonaldʹs restaurant reduces the price of a Big Mac from $4.00 to $3.25, the number ofBig Macs it sells per day will increase from 4 to 5. Explain the output effect and the price effect resulting fromthis change. Using a graph, illustrate both the loss in revenue from selling each of the first 4 Big Macs for $0.75less and the additional revenue from selling 1 more Big Mac. What is the total change in revenue receivedwhich results from this price decrease?33) Both monopolistically competitive firms and perfectly competitive firms maximize profits33)Diff: 1Page Ref: 434/434Topic: Short-Run Profit MaximizationLearning Outcome: Micro 15: Discuss the role of differentiation in monopolistic competition in comparison toother market conditionsAACSB: Reflective Thinking
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- Fall '13
- Monopolistic Competition, AACSB, Page Ref, Marginal concepts