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Why can a firm in monopolistic competition make an economic profit only in the short run?
A firm in monopolistic competition can make an economic profit only in the short run because in the long run, other firms can enter the market and offer similar products, increasing competition and driving down prices, which reduces the firm's ability to maintain high profits.
What else can I help you with?
Supernormal profit of monopolistic competition?
In the short run, abnormal profits exist but in the long run, it gets eroded away because new firms enter the industry.
What are the key differences between monopolistic competition in the short run and long run?
In the short run, firms in monopolistic competition can make profits or losses due to varying demand and costs. In the long run, firms can only make normal profits as new firms enter the market, increasing competition.
Firms in an industry will not earn long-run economic profits if?
In long run under perfect competition new firms enters into the market and share the profit of existing firms due to free entry and exit .the new firms in the long run enters into the market until they earn profit and leaves the market if they suffer looses. In short if there is free entry and exit
If Pepsi is trying to engage in monopolistic competition why do they keep introducing new flavors of Pepsi and Mountain Dew?
Your question is based on the false predication that Pepsi wants to engage in monopolistic competition. Pepsi can't realistically grab monopolistic market share. By diversifying their flavors, they appeal to a greater number of consumers. As long as they cover the short term costs of producing the new flavors of soda, it would stand to reason that they would continue selling them; from an economic stand point at least. From a marketing stand point, it does nothing to hurt their brand equity or value of the name, so they don't really produce new flavors at anything other than monetary cost. In layman's terms, they keep producing them because it's profitable for them to do so.
What are the disadvantages of monopolistic competition?
There are several potential disadvantages associated with monopolistic competition. They areSome differentiation does not create utility but generates unnecessary waste, such as excess packaging. Advertising may also be considered wasteful, though most is informative rather than persuasive.There is allocative inefficiency in both the long and short run. This is because price is above marginal cost in both cases. In the long run the firm is less allocatively inefficient, but it is still inefficient.
Supernormal profit of monopolistic competition?
In the short run, abnormal profits exist but in the long run, it gets eroded away because new firms enter the industry.
Why monopolistic competition in the short run making profit but in long run it would be break even?
In the short run a monopolistic firm can charge where MR=MC and that will be at a price that gains abnormal profits. They can do this in the short run because firms have a lag before they can be set up. But in the long run, the abnormal profits draw new firms into the industry and so this forces the firm to break even. Any profit at all- in theory- will draw in competitiors as there are limited barriers to entry.
What are the key differences between monopolistic competition in the short run and long run?
In the short run, firms in monopolistic competition can make profits or losses due to varying demand and costs. In the long run, firms can only make normal profits as new firms enter the market, increasing competition.
Why is there so much advertising in monopolistic competition?
In monopolistic competition, many different producers are involved in the market selling similar but somewhat different goods. Since the goods are somewhat different, one of the most important ideas which firms in monopolistic competition must understand is brand loyalty. In order to create brand loyalty, advertising is used to attract the attention of consumers. If this advertising is successful, it can lead to a consumer's predetermined assumptions about a firm's products which can enhance the loyalty which the consumer will display to the particular firm. The consumer will be more likely to keep returning to purchase more products from this firm, therefore allowing the firm to practice monopoly in the short run and make more of a profit as a result.
What is goals for franchise for short terms?
To simply earn profit for the purpose of economic goal.
A perfect competitor can reap an economic profit in the short term in the long term never in both the short and long term?
Short term
What is the profit maximizing decision a perfectly competitive firm makes in the short run and explain why this firm can make profits in the short run but not in the long run?
A perfectly competitive firm maximizes profit in the short run by producing the quantity where marginal cost equals marginal revenue. In the short run, firms can make profits due to price fluctuations and temporary market conditions, but in the long run, new firms can easily enter the market, increasing competition and driving down prices to the point where economic profits are reduced to zero.
Firms in an industry will not earn long-run economic profits if?
In long run under perfect competition new firms enters into the market and share the profit of existing firms due to free entry and exit .the new firms in the long run enters into the market until they earn profit and leaves the market if they suffer looses. In short if there is free entry and exit
If Pepsi is trying to engage in monopolistic competition why do they keep introducing new flavors of Pepsi and Mountain Dew?
Your question is based on the false predication that Pepsi wants to engage in monopolistic competition. Pepsi can't realistically grab monopolistic market share. By diversifying their flavors, they appeal to a greater number of consumers. As long as they cover the short term costs of producing the new flavors of soda, it would stand to reason that they would continue selling them; from an economic stand point at least. From a marketing stand point, it does nothing to hurt their brand equity or value of the name, so they don't really produce new flavors at anything other than monetary cost. In layman's terms, they keep producing them because it's profitable for them to do so.
What are the disadvantages of monopolistic competition?
There are several potential disadvantages associated with monopolistic competition. They areSome differentiation does not create utility but generates unnecessary waste, such as excess packaging. Advertising may also be considered wasteful, though most is informative rather than persuasive.There is allocative inefficiency in both the long and short run. This is because price is above marginal cost in both cases. In the long run the firm is less allocatively inefficient, but it is still inefficient.
If all firms only earn a normal profit in the long run firms will develop new products or lower-cost production methods because they can?
Innovate and possibly earn an economic profit in the short run.
When was Commonwealth Short Story Competition created?
Commonwealth Short Story Competition was created in 1996.
