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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 competition
There 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 competition
- Sellers 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.
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Explain price determination under monopolistic competition?
My heartfelt apologies, I don't mean to be rude. But, is this a loaded question? If it is a monopoly, there's no competition. Therefore you can determine the price any way you want. {eijgniy: hey there is such a market called monopolistic competition.
Evaluate price and output determination under imperfect market structure?
Would it not be a Monopolistic with imperfect market structure
When monopolistic competition is compared to perfect competition what can you generally expect with reguard to price output and profit?
We can expect that prices are higher, output is less, and profits are high er.
What is monopoly and how price and output decisions taken under monopoly?
Monopolistic competition refers to the the exclusive possession or control of the supply or trade in a commodity or service.
What forms can non-price competition take in monopolistic competition and oligopoly?
they take place in those areas
Explain price determination under monopolistic competition?
My heartfelt apologies, I don't mean to be rude. But, is this a loaded question? If it is a monopoly, there's no competition. Therefore you can determine the price any way you want. {eijgniy: hey there is such a market called monopolistic competition.
Evaluate price and output determination under imperfect market structure?
Would it not be a Monopolistic with imperfect market structure
When monopolistic competition is compared to perfect competition what can you generally expect with reguard to price output and profit?
We can expect that prices are higher, output is less, and profits are high er.
What is monopoly and how price and output decisions taken under monopoly?
Monopolistic competition refers to the the exclusive possession or control of the supply or trade in a commodity or service.
What forms can non-price competition take in monopolistic competition and oligopoly?
they take place in those areas
Why firms choose non-price competition over price competition?
Imperfectly competitive firms engage in none-price competition (like advertisement). For example, in monopolistic competition, each firm has their own customers(by establishing some consumer loyalty), modest change in the output price of any single firm has no perceptible influence on the sales of any other firm, i.e one firm can raise price without losing all customers. Therefore, price competition makes no sense.
Is it a good policy for governments to completely eliminate monopoly power?
no monopoly is better in some organizations because i it gives economy of scale and its gives better services because of its large scale business but monopolistic competition is better than monopoly because in monopolistic competition , organization has discretionary power on either quantity or price but in monopoly organization have more control on price or supply than monopolistic competition and can charge price of its own will.
Price and output determination under oligopoly?
Explain how price and output decision are taken under conditions of oligopoly.
Price determination in perfect competition?
Price under perfect competition is determined by the forces of demand and supply of the industry. The price once fixed up by the industry is taken up by all the firms and the firm can sell any number of units at hat price.=The firm may earn normal profits, super normal profits in the short run whereas it earns normal profits in the long run.=
How are a monopolistic firm and a competitive firm similar?
Monopoly means that there are no competitor for your product or servises
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 the Price elasticity of demand in each of the four market structures perfect competition monopoly monopolistic competition and oligopoly?
Perfect competition is perfectly elastic (taken from my Economics textbook)...still searching on the other three.
