1. Conditions for monopolistic competition
A monopolistically competitive market departs from a perfectly competitive market because each seller offers a somewhat differentiated product.

Explanation:
Under monopolistic competition, there are many sellers, similar to perfect competition. Sellers operating under either market structure will make zero economic profit in the long run, as price equals average total cost. However, the difference is that each of the sellers offers a somewhat differentiated product under monopolistic competition, which means that each seller faces a downward-sloping demand curve.

2. Profit maximization of a seller in a monopolistically competitive market
Consider a store that produces bagels in a monopolistically competitive market. The following graph shows its demand curve (Demand), marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC). Assume that the company is operating in the short run.

The profit-maximizing level of output is 160 bagels per day at a price of $5.50 each.

Explanation:
………
At the profit-maximizing output and price, the store’s economic profit equals  -$240.

Explanation:
The store will produce up to the point where marginal cost equals marginal revenue. This occurs at a quantity of 160 bagels, and the corresponding price on the demand curve is $5.50 per bagel. Notice that, at a quantity of 160 bagels, the average total cost is $7.00 per bagel.

You can now calculate economic profit at this point of production:

Profit  =  Total Revenue – Total Cost
=  Price x Quantity – Average Total Cost x Quantity
=  ($5.50 per bagel x 160 bagels) – ($7.00 per bagel x 160 bagels)
= $880 – $1,120
= -$240

Given the profit-maximizing choice of output and price, the store is making negative economic profit, which means that there are more stores in the industry relative to the long-run equilibrium.

3. How short-run profits or losses induce entry or exit

4. Entry or exit in the long run

5. Is monopolistic competition efficient?

6. Understanding excess capacity
7. The role of brand names and advertising

Ranchers Looking for Bigger Payday Launch Designer Beef Labels

ISLAND CITY, Ore. (AP) — After the steaks and beans were gone and the ice cream bars were being passed around at the annual barbecue at Intermountain Livestock’s stockyards, the talk turned to a new idea moving through the Old West.

The Oregon Cattlemen’s Association has been putting together a plan to market a branded product — as in brand name, not branding iron — called Oregon Trail Beef.

Starting around the first of the new year, OCA president John Hays hopes shoppers used to choosing Calvin Klein jeans over generic will do the same when they lean over the beef case at their local supermarket. The idea of a cooperative is to get bigger paydays for the ranchers wearing the Wrangler jeans by cutting out some of the middlemen.

“The buyer gets a commission, the feeder gets a commission, the trucker gets a commission, the processor gets a commission, and the retailer makes a good profit,” said Hays. “It’s gotten to the point the cow-calf operator was out of the equation. We figured there’s got to be a better way to do this.

While brand names started showing up on precut chicken decades ago, most beef still goes to market as a true commodity — one piece of meat is treated like another. But that’s changing, said Mark Thomas, vice president for consumer marketing of the National Cattlemen’s Beef Association.

Thomas estimates that 4 percent to 8 percent of the beef sold in the U.S. now is under a brand name — Certified Angus Beef, Laura’s Lean and Oregon Country Beef, to name a few — and that figure should double next year.

“The category is still very, very young, but it clearly is the direction the industry is going,” he said.

With its long preparation time and higher fat content, beef lost its place at the dinner table to poultry when American families got smaller, women went to work and people became more health-conscious, said Thomas. But producers now offer lower-fat cuts and companies like Harris Ranch Beef and IBP Inc., sell precooked entrees that working families can warm up in the microwave.

“There are only two ways to make money in agriculture,” said Mark Coomer, manager of the Farm Credit branch in Baker City, Ore. “That is to be the cheapest operator, or to have a niche market.”

A rancher typically gets $600 to $700 per steer, but Charles Lambert, NCBA’s chief economist, says those selling to brand-name operations can expect to see $15 to $60 more per head. Hays says he expects ranchers selling to Oregon Trail Beef to make another $100 a head on top of that by being part of a co-op.

The tradeoff for more money is that participating ranchers will have to give up some of the independence that has long been their hallmark. Somebody else will be telling them what breeds to raise, when to calve, what to feed and how to treat their cattle.

“To bring them together takes an act of God,” said Greg Fischer, who works as a cattle buyer to help his family keep their ranch going outside Elgin. “But in order for us to survive, we’re going to have to start doing that.”

Silas Gilliam, a district sales manager for Cenex and Harvest States Feed Co., said the Oregon Trail Beef concept is a good one, though he questions whether or not it will succeed because of ranchers’ go-it-alone nature .

“I think the biggest problem you’re going to have is getting enough producers to commit the number of head,” he said. “If you go in and say, `I want an Angus-Hereford cow bred to a Charolais bull and that’s all I’ll take,’ you know how many ranchers you’re going to make mad?”

Oregon Trail Beef is demanding ranchers raise a Hereford-Angus cross, and that they handle their cattle gently so the meat isn’t damaged. Hays says the co-op, whose logo is a cowboy cooking a steak with a wagontrain in the background, will have control of the beef from the time it goes into the packing house until it reaches the retailer. It has a budget for marketing and promotions as it pursues market share.

Brand-named beef is not a new idea. When Doc and Connie Hatfield and their neighbors started Oregon Country Beef back in 1986, they were among some 100 brand names launched in a bid to stay afloat at a time of historically low prices. But as generic beef prices rose, all but a few of them went broke, recalled Doc Hatfield.

Ortegon Country Beef survived by finding a niche, said Hatfield. It promoted its beef as range-raised with “graze-well” practices that are environmentally friendly, and fattened up without growth hormones, antibiotics or animal proteins. Hays says Oregon Trail Beef will sell its meat as naturally fed.

The success of small niche marketers has not gone unnoticed by the big dogs.

Last spring IBP Inc., based in Dakota Dunes, S.D., launched a new brand-name line called Thomas E. Wilson, after a turn-of-the-century meat baron. One of IBP’s 60 plants is devoted to that production, though the company plans to open another next spring.

“We think we can be the dominant name in the beef and pork case,” said Eugene Leman, CEO of IBP’s meat division.

Back at the Island City barbecue, cattle buyer Fischer said the ranching population is aging, young people can’t raise the money to buy land and cattle to get started, and inheritance taxes make it hard to keep ranches in the family. He hopes Oregon Trail Beef will help turn that around.

“We’re stubborn,” he said. “Nobody wants to give up.”

1. At the time the article was written, how much beef in the United States was sold under a brand name?

B. 4-8%

The article quotes an industry spokesperson who says that between 4% and 8% of beef was being sold under brand names such as Certified Angus and Laura’s Lean.

2. Which of the following demand curves best illustrates the demand for an individual cattle producer if his beef is considered a commodity (a product that is unspecialized and mass produced)?

B. Curve III

A cattle farmer is price taker. He can sell as much as he wants at the market price, but if he tries to increase his price, the quantity he can sell will fall to zero. This is illustrated by a perfectly elastic demand curve.

3. Which of the following graphs best illustrates the demand curve for a cattle producer selling Oregon Trail Beef?

D. Curve IV

By differentiating his product, the cattle producer can increase the price without quantity demanded falling to zero. The cattle producer would prefer the demand curve to be I, but given that non-brand-name beef is still a relatively close substitute, it is unlikely that the demand for Oregon Trail Beef would be perfectly inelastic.

4. According to the article, “most beef still goes to market as a true commodity- one piece of meat is treated like another.” What market structure is suggested for the beef industry by this quote?

A. Perfect competition

An industry characterized by small producers supplying identical products is considered perfectly competitive.

1. Welcome to Aplia!

True or False: You will not be able to redo practice problems once the deadline passes.
False

For Graded at Deadline problems, the problems will be graded at the exact moment of the deadline ,and you will not be able to try a problem again after it is graded.

For Grade It Now problems, if you want to save your work and come back to it later, you should click Save and Continue , and you get 3 attempts at each problem.

Remember, after you’ve clicked the Grade It Now button, you can click on any of the blue bars labeled “Explanation” to open an explanation of the correct answer.

2. How Grade It Now problems are scored

Because you’ll be encountering a lot of Grade It Now problems, it’s important that you understand exactly how your score will be calculated.

As you have learned, you can try up to three versions of any Grade It Now problem until the problem set’s deadline. Your instructor may use one of three grading schemes. You will be able to view the chosen option by checking Grading Option on the Contents page that lists the questions for each problem set.

When the grading option is set to Average, the grade that is reported to you instructor is the average score of each of your attempts as of the deadline, including any work you have saved but not submitted for grading. If you earn 1, 5, 3, the grade would be 3, or the average of all attempts.

When the grading option is set to Do No Harm, the grade that is reported to your instructor will include an attempt in the average process only if it does not lower the current average. Your first attempt is your base grade. The second attempt counts if it is higher than the first. The third attempt counts (as an equal part) if it is higher than the average of the first and second attempts. For instance, if you earn 1,5, 2, the grade would be 3 because the average of 1 and 5, which is 3, is higher than 2. You will not be penalized for successive attempts at redoing the homework questions with this scoring method.

When the grading option is set to Keep the Highest, the grade that is reported to your instructor will be the highest score of all attempts.

If you click Save and Continue for a problem and then fail to return and finish it, your incomplete work will be graded at the deadline and will pull down your average score if your attempts are averaged. If you click Try Another Version, be sure to complete the new version of the problem, or you risk a zero on the attempt. If you save your work and don’t complete anything, you’ll receive a zero for that attempt.

Test your understanding with the following example:

Yolanda is working on Aplia assignments in Grade It Now mode. Each assignment consists of a single problem worth five points. Yolanda answers the problem and clicks Grade It Now. She gets 1/5 on the first attempt and 5/5 on the second attempt. She then clicks Try Another Version to try the question a third time, but she gets a phone call before she can work on it. She clicks Save and Continue and answers the phone. She gets distracted by the phone call and doesn’t return to the problem set before the due date. By saving the third attempt but falling to complete it before the due date, Yolanda’s forgotten attempt is saved and recorded.

3. Introduction to Aplia’s interactive tools

True or False: What you do in a graph doesn’t ever count toward your grade, so it doesn’t matter whether you adjust a graph or not.
False

True or False: You can still get full credit for a tool question as long as what you’ve done is pretty close to the right answer.
False

4. The graphs tool

The graphs tool is designed to let you create a diagram from scratch or add elements to an existing diagram. There are four different kinds of object you can place on the graph: points, lines, curves, and areas. Each object has both a color and a shape for easy reference. To place an object on the graph, drag it from the area to the right of the graph (the “palette”) onto the graph itself. There is only one right answer for each graphs problem; you will receive credit for placing an object correctly only if you put it in exactly the right spot. To make sure you have placed all the objects precisely where you wanted, you should hover your mouse pointer over each one before you submit your answer. The exact coordinates of any points you placed will appear, so you can sure you put the object in exactly the right spot – and make any necessary adjustments if you need to.

Try it out! On the following graph, place two red points (cross symbol) at the coordinates
(6, 14) and (14, 14), in the middle of each of the two blue circles. Then, plot an orange line (square symbols) passing through the three black points labeled X, Y, and Z. Finally, use the green triangle (triangle symbols) to fill the grey triangle in the middle of the graph.
(Hint: For more information on using the graphs tool, click the Help button at any time.)

5. The shifter tool

The shifter tool allows you to manipulate economic diagrams showing production possibilities frontiers (PDFs) or budget constraints (you’ll learn what these terms mean later in the course).

In the shifter tool, you’ll see a single blue line or curve. You may also see a point outlined in orange. If there is no orange point, your task will be to shift the line or curve by dragging its endpoints with your mouse. If there is an orange point, your task will be to move the point to the right location, which will be one of the “Snap-to-Points” shown by the + signs.

Suppose the following line represents combinations of dimes and nickels that add up to $20: For example, 200 dimes are worth $20, 400 nickels are worth $20, and 100 dimes plus 200 nickels are worth $20. Drag the orange dot to the point (200 nickels, 100 dimes).

Explanation:
You should have placed the point at the coordinates (200, 100), which lies midway along the line.

Again, suppose the following line represents combinations of dimes and nickels that add up to $20. Now shift the curve by dragging its endpoints (the blue points at the ends of the line) so that it shows combinations of dimes and nickels that add up to $10. That is, drag one endpoint to 200 nickels and the other to 100 dimes.

Explanation:
Since 100 dimes make $10, and 200 nickels make $10, you should have shifted the line so that it intersects the horizontal axis at a quantity of 200 nickels and the vertical axis at a quantity of 100 dimes.

6.The dragger tool

The dragger tool is designed to let you answer questions by shifting curves on a graph from one position to another, moving a point along a curve, or both. Economists love to shift curves, so you’ll probably use this tool a lot.

Let’s start by shifting a curve. Place your cursor over any part of the blue curve labeled “Demanded.” Now click the mouse button and hold it as you drag the curve to the right. You should see the curve move with your mouse. When you want to place the curve in its new position, just let go of the mouse button. The tool allows you to place the curve in only few positions, so the curve will snap into place once you have moved it. If the curve snaps back to its original position, just try again and drag it a little farther.

Explanation:
Notice that when you move the curve, the word “Demand” disappears. The diagram shows the old position of the demand curve in grey and labels it “D1,” while it shows the new position of the demand curve in blue and labels it “D2.” In other words, when you’ve completed a diagram like this one, it should show the original positions of the curves as well as the new positions, to let you compare the situations before and after the shift.

Now let’s try moving the point along the curve. Place your cursor on top of the black point located in the middle of the curve. Now, drag the point along the curve. Notice that you can drag it only along the curve. If you try to drag the point off the curve, you won’t have much luck.

Place the point on the curve below and to the right of its original position. The tool allows you to place the point in only a few positions, so the point will snap into place once you have moved it. If the point snaps back to its original position, just try again and drag it a little farther.

When you are satisfied with you answers, click the Grade It Now button.

Explanation:
If you got either of these questions wrong, you might want to click Try Another Version at the bottom of the page to try again.

7. The calculator tool

The calculator tool is used to generate data from a diagram. The diagram may show an orange line and/or a blue line  (usually these represent supply and demand curves, but not always) and also has a green vertical or horizontal line. You can move this green line around.

These are boxes with numbers to the right of the diagram. As you move green line around, some of the these numbers change. In this case, the green line represents the price of breakfast cereal, and the numbers to the right of the diagram show the quantity of breakfast cereal demanded and supplied at any price you set.

Notice that you also set the price by typing it directly into the Price box (the top box on the right-hand side). On the graph above, change the price of cereal to $7 per box. You can see that at this price will be 125 million boxes of cereal demanded and 417 million boxes of cereal supplied. Reading from the calculator, you can also see that this causes a “surplus” of 292 million boxes per year.

The calculator tool is usually employed to help you find a numeric answer to a question. Consider the Supply Shifter section of the calculator tool. The entry field next to Price of Gasoline indicated that the initial price of gasoline is $3 per gallon. To see what happens in the market for cereal if the price of gasoline increases, type “4” in the Price of Gasoline box and click the Calculate button. Make sure the green line representing the price of cereal is at $7 per box (if it’s not, move it now). Now the Quantity Supplied box display 333 million boxes.

Explanation:
If you type “4” in the Price of Gasoline box and click Calculate button, and then move the green line to $7 per box (so “7” appears in the Price box), the Quantity Supplied box should display 333 million boxes. If you got this wrong, click Try Another Version to try again.

8. Different question styles

Which of the following actions would allow you to scroll down the page? Check all that apply.

X  Click the Down arrow at the bottom of the scroll bar on the right side of the
screen.
Press the Backspace key on the keyboard.
X  Use your mouse to drag the scroll bar on the right side of the screen.

In many questions, you will be asked to fill in blanks in order to complete sentences or enter values into a table. When you see a blank menu, click it and your list of options will be revealed. Select your answer and proceed. You can select only one answer from a dropdown menu.

Radio button questions and blanks must have only one correct answer. Meanwhile, checkbox questions may contain multiple correct statements.

In some cases, you may need to answer questions by completing tables or selecting radio buttons and/or checkboxes in a table. Complete the table by dividing 21 by 6 and using the dropdown menu to select your answer.

Now use the table to classify each item in the left column as either a day of the week or a month.

9. Numeric and text entry

10. Matters of time

What happens if you are signed in to Aplia but you don’t click any of these buttons for an hour or more?

You are automatically signed out of Aplia, and any answers you have not submitted or saved are lost.

How do you submit your answers to your instructor?

Just click the Grade It Now or Save and Continue button after you’ve answered each question.

Suppose your Assignments page lists the deadline for a particular assignment as 11:00 PM (which means 11:00:00). If you submit an answer at 11:00:37 PM (that is, 37 seconds after 11:00 PM), which of the following will happen?

The server will reject your answer because the deadline has passed.

Consider the following statement: “Modern computer hardware, software, and networks are so reliable that you can count on being able to submit your answers to online assignments in the last 10 or 20 minutes before a deadline.”
Pick the best response.

If you put off assignments until the last minute, you run the risk you not being able to submit them on time.

11. If you need help

If you are having technical problems with the Aplia website, what is the first thing you should do?

Run the System Configuration Test, located on the Aplia homepage

In which of the following situations should you contact Aplia Support (by clicking the Support link in the upper-right corner of any Aplia page)? Check all the apply.
X  You can’t register.
X  You need help using the site.
X  You are unable to submit your answers.
X  You’re experiencing a technical problem, and running the System Configuration Test hasn’t fixed it.

1. Understanding opportunity cost

Before you started applying for college, you were offered a full-time position as a cashier at a local department store earning an after-tax salary of $28,000 per year. However, you turned down this offer and decided to attend your first year of college. The additional monetary cost of college to you, including tuition, supplies, and additional housing expenses, is $28,000.

You decided to go to college, probably because you value a year college at
more than $56,000.