In the short run fixed costs remain consistent

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In the short run, fixed costs remain consistent. Marginal costs increase with the quantity of output. The marginal cost curve also cross the average total cost curveat a minimum of average total cost. To increase profit, the business would have to increase prices or increase the output. To increase output, there would need tobe more workers hired which also increases variable costs. The average total cost curve in a short run is much more “U” shaped than in the long run. In thisexample when the business increases workers, it increases production, but the average-total-cost increases from $10,000 to $12,000. In the long run however, abusiness has more options. They can build more factories, close old inefficient ones, or increase the size of factories. This gives the business more options andturns the fixed costs into variables.Market Structures[Complete the table by selecting the appropriate response from the drop-down select menu within each cell, except for the final column in which you will enteryour text-based response.]MarketStructureNumber ofFirmsType ofProduct SoldPriceTaker?PriceFormulaFreedom ofEntry?Short-runProfit?Long-runProfit?Industry ExamplesPerfectCompetitionAgriculture firmsForeign exchange marketsOnline shoppingMonopolisticCompetitionRestaurants, breweries, and hotels
MarketStructureNumber ofFirmsType ofProduct SoldPriceTaker?PriceFormulaFreedom ofEntry?Short-runProfit?Long-runProfit?Industry ExamplesMonopoliesRailroad, Microsoft, LuxotticaOligopoliesMass media, Coca-Cola/PepsiAirline companiesTable 4.1There are several different types of inefficiencies that happen with monopolies. "Because a monopoly charges a price above marginal cost, not allconsumers who value the good at more than its cost buy it." (Mankiw, 2021) This inefficiency causes the monopolist to produce at a level that is lower thanwhat would be socially efficient. Unfortunately, in this situation there is what is caused a "deadweight loss" which has a similar effect to taxes charged onproducts-but in this case, there is no lose-win with the government generating revenue to source back into the environment. The government does haveoptions to try to correct these inefficiencies though by regulating behavior, trying to make the monopolies more competitive, or by turning them into publicenterprises.Antitrust laws increase competition by potentially keeping some companies that are competitors from merging or allowing other companies tomerge in order to increase efficiencies by decreasing expenses. Government can also regulate prices or take on the monopoly and run it themselves (like theUSPS).Monopolistic competition can also have some inefficiencies. It also has the same issues as monopolies in that it will still have deadweight because ofits charge over marginal cost. In comparison to perfectly competitive markets, these markets tend produce below the efficient scale of the firm, therefore

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