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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 is a monopoly produces in perfectly competitive market?
In a perfectly competitive market, a monopoly would produce at a level where marginal cost equals marginal revenue, but unlike in perfect competition, it would restrict output to maximize profits. This results in higher prices and lower quantities than would occur in a competitive market, where many firms produce the same product and prices are driven down to marginal cost. Consequently, a monopoly typically leads to inefficiencies and a welfare loss in the economy, as consumer surplus is reduced and producer surplus increases.
What is the basic difference between pure competition and monopolies?
The basic difference between pure competition and monopolies lies in market structure and control over prices. In pure competition, many firms offer identical products, leading to price-taking behavior where no single firm can influence market prices. Conversely, a monopoly exists when a single firm dominates the market, allowing it to set prices above the competitive equilibrium and restrict output to maximize profits. This results in less consumer choice and potentially higher prices compared to a competitive market.
What does the word profit mean?
Profit is an excess of returns over outlay.
Why monopoly is not productive efficient?
Monopoly is not productively efficient because it restricts output to maximize profits, leading to a higher price than in competitive markets. This results in a deadweight loss, where potential gains from trade are not realized, as consumer demand is not fully met. Additionally, monopolies may lack the incentive to innovate or reduce costs, since they face no competition. As a result, resources are not allocated optimally, diminishing overall economic welfare.
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.
Do the results support the principle of competitive exclusion?
Yes, if the results show that one species outcompetes another leading to the elimination of the second species, it supports the principle of competitive exclusion. This principle states that two species competing for the same limited resource cannot coexist in the long term.
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.
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.
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.
