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Under what circumstances will a monopolistically competitive firm's demand curve be least elastic?
A monopolistically competitive firm's demand curve will be least elastic when its products are unique and have few close substitutes, leading to less responsiveness to price changes by consumers.
A firm in a monopolistically competitive market is similar to a monopolist in the sense that it?
faces a downward-sloping demand curve
Why is marginal cost curve horizontal?
because mc=mb
Why does the marginal cost curve correspond to the supply curve?
A perfectly competitive firm's supply curve is that portion of its' marginal cost curve that lies above the minimum of the average variable cost curve. A perfectly competitive firm maximizes profit by producing the quantity of output that equates price and marginal cost. As such, the firm moves along it's marginal cost curve in response to alternative prices. Because the marginal cost curve is positively sloped due to the law of diminishing marginal returns, the firm's supply curve is also positively sloped.
Is there any relationship between marginal revenue curve and demand curve?
Yes, there is a relationship between the marginal revenue curve and the demand curve. For a monopolistic firm, the marginal revenue curve lies below the demand curve because the firm must lower the price on all units sold to sell additional units, resulting in diminishing marginal revenue. In contrast, for a perfectly competitive firm, the marginal revenue curve is horizontal and coincides with the demand curve, as the firm can sell any quantity at the market price without affecting it. Thus, while the two curves are related, their positions and shapes differ based on the market structure.
Under what circumstances will a monopolistically competitive firm's demand curve be least elastic?
A monopolistically competitive firm's demand curve will be least elastic when its products are unique and have few close substitutes, leading to less responsiveness to price changes by consumers.
A firm in a monopolistically competitive market is similar to a monopolist in the sense that it?
faces a downward-sloping demand curve
Why is marginal cost curve horizontal?
because mc=mb
Why does the marginal cost curve correspond to the supply curve?
A perfectly competitive firm's supply curve is that portion of its' marginal cost curve that lies above the minimum of the average variable cost curve. A perfectly competitive firm maximizes profit by producing the quantity of output that equates price and marginal cost. As such, the firm moves along it's marginal cost curve in response to alternative prices. Because the marginal cost curve is positively sloped due to the law of diminishing marginal returns, the firm's supply curve is also positively sloped.
Is there any relationship between marginal revenue curve and demand curve?
Yes, there is a relationship between the marginal revenue curve and the demand curve. For a monopolistic firm, the marginal revenue curve lies below the demand curve because the firm must lower the price on all units sold to sell additional units, resulting in diminishing marginal revenue. In contrast, for a perfectly competitive firm, the marginal revenue curve is horizontal and coincides with the demand curve, as the firm can sell any quantity at the market price without affecting it. Thus, while the two curves are related, their positions and shapes differ based on the market structure.
How is a perfectly competitive firms marginal cost curve related to its supply curve?
a perfectly competitive firms supply curve will be the portion of the marginal cost curve which lies above the average variable cost curve (AVC)..this will be due to the firms unwillingness to supply below the price in which they could cover their variable costs
The demand curve for a monopolist differs from the demand curve faced by a competitive firm?
The pure monopolist's market situation differs from that of a competitive firm in that the monopolist's demand curve is downsloping, causing the marginal-revenue curve to lie below the demand curve. Like the competitive seller, the pure monopolist will maximize profit by equating marginal revenue and marginal cost. Barriers to entry may permit a monopolist to acquire economic profit even in the long run.
Why does a Perfect Competition firms demand curve is also its marginal revenue curve?
AnswerFor a perfectly competitive firm with no market control, the marginal revenue curve is a horizontal line. Because a perfectly competitive firm is a price taker and faces a horizontal demand curve, its marginal revenue curve is also horizontal and coincides with its average revenue (and demand) curve. Yes - what you must remember is that a firm's demand curve in perfect competition is its average revenue curve. Average revenue = price x quantity / quantity = price. The demand curve shows the quantity demanded at varying prices and this is exactly what the average revenue curve will do.Because there are so many sellers in the market, no one firm has enough market power to influence price (if a firm tried to raise price consumers would move to different suppliers; nobody would buy the good), therefore price is determined by industry supply and demand, and a firm can produce any quantity at this price . This means that the firm faces a horizontal average revenue (demand curve) and if average revenue is constant, this means total revenue is increasing at a constant rate, and therefore marginal revenue is constant as well.
What is the demand curve for output of a perfectly competitive firm?
Demand = Price = Marginal Cost.
What is a firm's short run supply curve?
A perfectly competitive firm's supply curve is that portion of its marginal cost curve that lies above the minimum of the average variable cost curve.
Profit maxiamisation in a perfect economy?
Profit maximization occurs when the firm produces /sets their price at the intersection of the marginal cost curve and the horizontal MR DARP curve (marginal revenue, demand, average revenue, price)
The labor demand curve of a purely competitive seller perfectly elastic?
yes the demand curve is perfectly inelastic and horizontal
