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Compare the short-run and long-run equilibriums in monopolistic competition with those in perfect competition Pay particular attention to the issue of efficiency?
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What is the Price output determination under monopolistic competition?
Define monopolistic competition. How price & output is determined under monopolistic competition.Answer: - monopolistic competition: - in 1933, a Harvard university professor, Edward chamberlain" published his book, "the theory of monopolistic competition" in which he defined monopolistic competition as:Definition: - "a market model with freedom of entry and large number of firms that produce similar by slightly differentiated products, advertisement being the principal tool for differentiating the products".Define monopolistic competitionThere are various goods like soap, cloth, & tooth paste, which are produced under monopolistic competition.CONDITIONS OF MONOPOLISTIC COMPETITION: - following are the important conditions of monopolistic competitionSellers and buyers: - there is a large number of buyers and sellers in the monopolistic market. Generally, the number of firms is within 25-30.Small share of supply: - each firm acts independently and produce a small share of the total output.Differentiated products: - the product of each firm can be differentiated by trade mark or packing.Entry of new firms: - in a monopolistic competition, new firms can easily enter into the market.Inefficient firms in the market: - inefficient firms also live in the market side by side & sell the defective products.Control over price: - a firm has only limited control cover the price of the product according to its supply.Elastic demand curve: - the demand curve of the firm is negatively sloped, and because there are many firms in the market which are producing a similar commodity. Therefore, the demand for the products of each firm is elastic.Advertising: - In a monopolistic competition, firms spends a lot of money on advertisement, to attract the consumers.Stiff competition: - there is a stiff competition among the firms for the sale of a particular brand, not only in price but also in the quantity of the product.
What is monopolistic exploitation?
Monopolistic exploitation is where a company takes advantage of consumers. This is common in cases where the company is the only provider of that particular product or service.
Match the type of market structure with each example a pure competition online auctioning b monopoly video rental stores c monopolistic competition water and sewer service d oligopoly?
Pure competition-Online auctioning Monopoly-Water and sewer service Monopolistic competition-Video rental stores Oligopoly-Digital camera makers
What is a list of the features of imperfect competition?
D.Sathish MBA.,Important features of imperfectcompetition:1. Existence of large number of firms:· The first important feature of monopolistic competition is that there are a large number of firms satisfying the market demand for the product. As there are a large number of firms under monopolistic competition, there exists stiff competition between them. These firms do not produce perfect substitutes. But the products are close substitute for each other.(2) Product differentiations:· The various firms under monopolistic competition bring out differentiated products which are relatively close substitutes for each other. So their prices cannot be very much different from each other. Various firms under monopolistic competitors compete with each other as the products are similar and close substitutes of each other. Differentiation of the product may be real or fancied.· Real or physical differentiation is done through differences in materials used, design, color etc. Further differentiation of a particular product may be linked with the conditions of his sale, the location of his shop, courteous behaviour and fair dealing etc.(3) Some influence over the price:· As the products are close substitutes of others any reduction of price of a commodity by a seller will attract some customers of other products. Thus with a fall in price quantity demanded increases. It therefore, implies that the demand curve of a firm under monopolistic competition slopes downward and marginal revenue curve lies below it.· Thus under monopolistic competition a firm cannot fix up price but has influence over price. A firm can sell a smaller quantity by increasing price and can sell more by reducing price. Thus under monopolistic competition a firm has to choose a price-output combination that will maximize price.(4) Absence of firm's interdependence:· Under oligopoly, the firms are dependent upon each other and can't fix up price independently. But under monopolistic competition the case is not so. Under monopolistic competition each firm acts more or less independently. Each firm formulates its own price-output policy upon its own demand cost.(5) Non-price competition:· Firms under monopolistic competition incur a considerable expenditure on advertisement and selling costs so as to win over customers. In order to promote sale firms follow definite -methods of competing rivals other than price. Advertisement is a prominent example of non-price competition.· The advertisement and other selling costs by a firm change the demand for his product. The rival firms compete with each other through advertisement by which they change the consumer's wants for their products and attract more customers.(6) Freedom of entry and exit:· In a monopolistic competition it is easy for new firms to enter into an existing firm or to leave the industry. Lured by the profit of the existing firms new firms enter the industry which leads to the expansion of output. But there exists a difference.· Under perfect competition the new firms produce identical products, but under monopolistic competition, the new firms produce only new brands of product with certain product variation. In such a law the initial product faces competition from the existing well- established brands of product.
What is productive efficiency?
It is the production of any particular good in the least costly way.
What is the Price output determination under monopolistic competition?
Define monopolistic competition. How price & output is determined under monopolistic competition.Answer: - monopolistic competition: - in 1933, a Harvard university professor, Edward chamberlain" published his book, "the theory of monopolistic competition" in which he defined monopolistic competition as:Definition: - "a market model with freedom of entry and large number of firms that produce similar by slightly differentiated products, advertisement being the principal tool for differentiating the products".Define monopolistic competitionThere are various goods like soap, cloth, & tooth paste, which are produced under monopolistic competition.CONDITIONS OF MONOPOLISTIC COMPETITION: - following are the important conditions of monopolistic competitionSellers and buyers: - there is a large number of buyers and sellers in the monopolistic market. Generally, the number of firms is within 25-30.Small share of supply: - each firm acts independently and produce a small share of the total output.Differentiated products: - the product of each firm can be differentiated by trade mark or packing.Entry of new firms: - in a monopolistic competition, new firms can easily enter into the market.Inefficient firms in the market: - inefficient firms also live in the market side by side & sell the defective products.Control over price: - a firm has only limited control cover the price of the product according to its supply.Elastic demand curve: - the demand curve of the firm is negatively sloped, and because there are many firms in the market which are producing a similar commodity. Therefore, the demand for the products of each firm is elastic.Advertising: - In a monopolistic competition, firms spends a lot of money on advertisement, to attract the consumers.Stiff competition: - there is a stiff competition among the firms for the sale of a particular brand, not only in price but also in the quantity of the product.
What is monopolistic exploitation?
Monopolistic exploitation is where a company takes advantage of consumers. This is common in cases where the company is the only provider of that particular product or service.
Why is there so much advertising in monopolistic competition?
In monopolistic competition, many different producers are involved in the market selling similar but somewhat different goods. Since the goods are somewhat different, one of the most important ideas which firms in monopolistic competition must understand is brand loyalty. In order to create brand loyalty, advertising is used to attract the attention of consumers. If this advertising is successful, it can lead to a consumer's predetermined assumptions about a firm's products which can enhance the loyalty which the consumer will display to the particular firm. The consumer will be more likely to keep returning to purchase more products from this firm, therefore allowing the firm to practice monopoly in the short run and make more of a profit as a result.
Match the type of market structure with each example a pure competition online auctioning b monopoly video rental stores c monopolistic competition water and sewer service d oligopoly?
Pure competition-Online auctioning Monopoly-Water and sewer service Monopolistic competition-Video rental stores Oligopoly-Digital camera makers
What is a list of the features of imperfect competition?
D.Sathish MBA.,Important features of imperfectcompetition:1. Existence of large number of firms:· The first important feature of monopolistic competition is that there are a large number of firms satisfying the market demand for the product. As there are a large number of firms under monopolistic competition, there exists stiff competition between them. These firms do not produce perfect substitutes. But the products are close substitute for each other.(2) Product differentiations:· The various firms under monopolistic competition bring out differentiated products which are relatively close substitutes for each other. So their prices cannot be very much different from each other. Various firms under monopolistic competitors compete with each other as the products are similar and close substitutes of each other. Differentiation of the product may be real or fancied.· Real or physical differentiation is done through differences in materials used, design, color etc. Further differentiation of a particular product may be linked with the conditions of his sale, the location of his shop, courteous behaviour and fair dealing etc.(3) Some influence over the price:· As the products are close substitutes of others any reduction of price of a commodity by a seller will attract some customers of other products. Thus with a fall in price quantity demanded increases. It therefore, implies that the demand curve of a firm under monopolistic competition slopes downward and marginal revenue curve lies below it.· Thus under monopolistic competition a firm cannot fix up price but has influence over price. A firm can sell a smaller quantity by increasing price and can sell more by reducing price. Thus under monopolistic competition a firm has to choose a price-output combination that will maximize price.(4) Absence of firm's interdependence:· Under oligopoly, the firms are dependent upon each other and can't fix up price independently. But under monopolistic competition the case is not so. Under monopolistic competition each firm acts more or less independently. Each firm formulates its own price-output policy upon its own demand cost.(5) Non-price competition:· Firms under monopolistic competition incur a considerable expenditure on advertisement and selling costs so as to win over customers. In order to promote sale firms follow definite -methods of competing rivals other than price. Advertisement is a prominent example of non-price competition.· The advertisement and other selling costs by a firm change the demand for his product. The rival firms compete with each other through advertisement by which they change the consumer's wants for their products and attract more customers.(6) Freedom of entry and exit:· In a monopolistic competition it is easy for new firms to enter into an existing firm or to leave the industry. Lured by the profit of the existing firms new firms enter the industry which leads to the expansion of output. But there exists a difference.· Under perfect competition the new firms produce identical products, but under monopolistic competition, the new firms produce only new brands of product with certain product variation. In such a law the initial product faces competition from the existing well- established brands of product.
What is productive efficiency?
It is the production of any particular good in the least costly way.
What is free competition?
Its the competition that comes from allowing anyone who wants to sell a particular service or item to do so. So if three people want to sell flowers, there is a competition between them to earn your business
What is free market competition?
Its the competition that comes from allowing anyone who wants to sell a particular service or item to do so. So if three people want to sell flowers, there is a competition between them to earn your business
Productive efficiency is the production of any particular good in the least costly way. True or False?
True
If a certain business monopolizes a particular industry the government will attempt to stop it. This is an example of which economic function of government?
Efficiency
If a certain business monopolizes a particular industry, the government will attempt to stop it. This is an example of which economic function of government?
Efficiency
What are the common examples of cut throat competition?
An example of cut throat competition is Samsung stealing Apple's design for phones. This particular case went to court and they decided to settle.
