ABC Corporation Is a Monopolistic Competitor

question 134

Essay

ABC Corporation is a monopolistic competitor.It has fixed costs of $5,000 and a
constant marginal cost of $500 per unit of production.It faces a demand curve
described by this equation:
P = 1,000 - 10Q.
A) Find ABC's equilibrium price and quantity.
B) Will it earn monopoly profits at this equilibrium?
C) What will happen to ABC's price, quantity, and monopoly profits in the long
run?

• A) Find ABC's equilibrium price and quantity.
• B) Will it earn monopoly profits at this equilibrium?
• C) What will happen to ABC's price, quantity, and monopoly profits in the long
• run?

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Definitions:

Measurements

Quantitative data obtained by measuring objects or events using standard units.

Percentile

In statistics, this term refers to the threshold under which a specific percentage of data within a collection is observed.

Interquartile Range

The difference between the 75th and 25th percentiles of a dataset, representing the spread of the middle 50% of the data.

Tchebysheff's Theorem

A statistical theorem stating that for any distribution, the proportion of outcomes within k standard deviations of the mean is at least 1-1/k^2 for k>1.