Consider the daily market for hot dogs in a small city. Suppose that this market is in long-run competitive equilibrium, with many hot dog stands in the city, each one selling the same kind of hot dogs. Therefore, each vendor is a price taker and possesses no market power. The following graph shows the demand (DD) and supply (S=MCS=MC) curves in the market for hot dogs.

Monopoly 5.0 4.5 Monopoly Outcome 4.0 MC 3.5 3.0 2.5 2.0 1.5 1.0 0.5 D MR 20 40 60 80 100 120 140 160 180 200 QUANTITY (Hot dogs) In the following table, enter the price and quantity that would arise in a perfectly competitive market; then enter the profit-maximizing price and quantity that would be chosen if a monopolist controlled this market. Price Quantity Market Structure (Dollars) (Hot dogs) Perfect Competition Monopoly Given the summary table of the two different market structures, you can infer that, in general, the price is higher under a and the quantity is higher under a perfectly competitive market v PRICE (Dollars per hot dog)

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