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What is one market trend that results when a monopolistically competitive firm starts earning profits well above its costs?
Wiki User
∙ 10y ago
Fierce competition would encourage rivals to create new ways to differentiate their products and lure customers to them.
Wiki User
∙ 10y ago
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Explain why monopolistically competitive firms frequently prefer non price to price competition?
The monopolistically competitive firm frequently prefers nonprice competition to pricecompetition, because the latter can lead to the firm producing where P = ATC and thus makingno economic profit or, worse, producing in the short run where P < ATC and thus losing money,with the possibility of eventually going out of business.Nonprice competition, on the other hand, if successful, results in more monopoly power: Thefirm's product has become more differentiated from now less-similar competitors in the industry.This increase in monopoly power allows the firm to raise its price with less fear of losingcustomers. Of course, the firm must still follow the MR = MC rule, but its success in nonpricecompetition has shifted both the demand and MR curves upward to the right. This results insimultaneously a larger output, a higher price, and more economic profits.
What does the word profit mean?
Profit is an excess of returns over outlay.
Is monolistic competition closer to perfect competition?
Yes, although there are differences. One difference between monopolistic competition and perfect competition is the type of product. Perfect competition means that firms sell identical (or homogeneous) products. Firms in a monopolistically competitive industry sell products that are slightly different. Product differentiation may be based on product quality, customer support, variety, flavor, or other aspects of the product that matter to consumers. In both market structures, there are many buyers and sellers, perfect information, and free entry and exit. Also, economic profit is zero in long-run equilibrium, although only perfect competition results in an efficient outcome with minimum average total cost and marginal benefit equal to marginal cost. The other two market models, monopoly and oligopoly, both involve industries dominated by a single firm or only a few firms and there are probably barriers that prevent new firms from entering the industry to drive down profits.
Why does competation among proudcers results in lower prices and better pruducts quality and costermers services?
Competition forces manufacturers to produce higher quality less expensive products in order to be competitive in their market because consumers demand high quality and lower priced products.
Explain why perfect competition may result in allocative efficiency?
Because in a perfectly competitive market, resources are used perfectly efficiently (excuse the grammar). A purely competitive market has very many peculiar features. One of them is that every firm is a price taker. This means they cannot set the price, so they must be as efficient as the most efficient competitor or they will be out-priced. This results in inefficient firms going out of business and only the most efficient staying alive.
Explain why monopolistically competitive firms frequently prefer non price to price competition?
The monopolistically competitive firm frequently prefers nonprice competition to pricecompetition, because the latter can lead to the firm producing where P = ATC and thus makingno economic profit or, worse, producing in the short run where P < ATC and thus losing money,with the possibility of eventually going out of business.Nonprice competition, on the other hand, if successful, results in more monopoly power: Thefirm's product has become more differentiated from now less-similar competitors in the industry.This increase in monopoly power allows the firm to raise its price with less fear of losingcustomers. Of course, the firm must still follow the MR = MC rule, but its success in nonpricecompetition has shifted both the demand and MR curves upward to the right. This results insimultaneously a larger output, a higher price, and more economic profits.
What is the goal of promotion?
Product recognition to increase sales that will results to more profits.
What were the positive and negative results of the cotton boom?
Positive would be: increased profits for raw goods. Negative would be: increased costs for making profits as in slave ownership
What describes the relationship between pricing objectives and promotion?
Pricing objectives are all about maximizing profits. Promotion results through efficiently achieving your objective - which in this case is all about maximizing profits.
What is 3rd Competitive exclusion scenario 3?
Two possibilities, whichever is more abundant win (a) The point where the isoclines cross is an unstable equilibrium (b) Competitive exclusion results
What are the impact of advertisement in sales in an organization?
Advertising enables to enhance sales of an organisation which in-return results in obtaining better profits.
What were the ratings for season 3 of American idol?
The third season of American Idol was ranked by Forbes as the most successful of all reality TV shows earning the network 260 million in profits by the end of the 3rd season. The third season had 360 million votes and 25 million watched the final elimination with 28 million watching the results show
What is main thing of cash flow?
(a) It needs to be positive, and (b) cash flow without corresponding profits ultimately results in disaster.
Bona fide competitive behavior can constitute wrongful interference with a contractual relationship?
No, because bona fide competitive behavior is a permissible interference, even if it results in breaking of a contract.
What are the results of income inequality?
All else equal, relative poverty for the lowest income, and lower profits for corporations as a result of shrinking consumerism.
How can the relationship between sales and profits be written?
The relationship between sales and profits can be expressed through the profit margin formula, which is (Profit / Sales) x 100. This formula shows what percentage of sales results in profit. A higher profit margin indicates that a company is more efficient at converting sales into profit.
Why is privatization of education necessary?
It isn't. In fact quite the reverse is true. Privatisation of anything results in it becoming a for-profit venture, and the cost of higher profits is the quality of education.
