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What are the two approaches of profit maximization under monopolistically competitive market in the short run?
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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 the demand curve facing a monopolist less elastic than one facing a firm that operates in a monopolistically competitive market?
In a monopoly, the monopolist company is the only product in the market place. However, a company competing in a monopolistically competitive market has multiple "similar" competitors that all try and differentiate themselves with specialized or additional services; i.e. the Italian restaurant serving food only from northern Italy. These companies may be a monopoly in the sense that their niche product is one-of-a-kind, but there are substitute products that can replace them if their price becomes too high to the consumer. As a result, the firm in a monopolistically competitive has a more elastic demand than a true monopolist.
Which statements is true about profits in a monopolistically competitive market?
many firms will earn profits in the short term, but they must constantly innovate and compete to earn profits in the long term
What is one market trend that results when a monopolistically competitive firm starts earning profits well above its costs?
Fierce competition would encourage rivals to create new ways to differentiate their products and lure customers to them.
Which is more comprehensive objective profit maximization or shareholder wealth maximization?
If the company is public listed (trades in the stock market) their aim is shareholder wealth maximization whereas for a privately owned firm a profit maximization objective is appropriate.
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 the demand curve facing a monopolist less elastic than one facing a firm that operates in a monopolistically competitive market?
In a monopoly, the monopolist company is the only product in the market place. However, a company competing in a monopolistically competitive market has multiple "similar" competitors that all try and differentiate themselves with specialized or additional services; i.e. the Italian restaurant serving food only from northern Italy. These companies may be a monopoly in the sense that their niche product is one-of-a-kind, but there are substitute products that can replace them if their price becomes too high to the consumer. As a result, the firm in a monopolistically competitive has a more elastic demand than a true monopolist.
Which statements is true about profits in a monopolistically competitive market?
many firms will earn profits in the short term, but they must constantly innovate and compete to earn profits in the long term
What is one market trend that results when a monopolistically competitive firm starts earning profits well above its costs?
Fierce competition would encourage rivals to create new ways to differentiate their products and lure customers to them.
What are the criticism baumol's sales maximisation model?
Criticism of Baumol's sales maximization model includes the assumption of profit maximization as the main goal of firms, the lack of consideration for other objectives like shareholder wealth maximization, and the oversimplification of managerial behavior by focusing solely on sales revenue. Additionally, critics argue that the model does not account for dynamic market conditions and competitive strategies that firms may adopt.
The goals of the market participants are the maximization of?
satisfaction from purchase for consumers
In a market economy the purpose of all firms is .?
Profit Maximization
Which is more comprehensive objective profit maximization or shareholder wealth maximization?
If the company is public listed (trades in the stock market) their aim is shareholder wealth maximization whereas for a privately owned firm a profit maximization objective is appropriate.
What is the goal of all economic decisions in the market economy?
utility maximization
What is the wealth maximization?
Wealth maximization is a modern approach to financial management. It is also known as Value Maximization. The focus of financial management is on the value to owners or suppliers of equity capital. The wealth of owners is reflected in the market value of shares so wealth maximization implies the maximization of the market value of the shares or it simply means maximization of shareholder's wealth.
What are the advantages and disadvantages of profit maximization?
The advantages of profit maximization is that creates a cash flow and investors become interested in companies that are maximizing their profits. The main disadvantage of it is that there are risks for business owners involved.An advantage of profit maximization is that it could create a huge increase in cash flow as long as the market remains good. However, a disadvantage is that if the market collapses during a period of profit maximization the business could lose everything.
Is cigarette market a perfectly competitive market?
There is no such thing as a perfectly competitive market. It is merely a economic model to compare other market structures to. Cigarette market is more likely a oligopoly.
