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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.
In what market structures is it possible for Firms to make positive profit in the long run?
Monopoly and Oligopoly are both the only firms that may make positive profit in the long run. Under LONG-RUN MARKET TENDENCY OF PRICE AND ATC: Monopoly P>ATC and Oligopoly P>ATC both will have postive profits, however it possible to turn to zero profits if there isn't capitalization of the profits or any rent-seeking activities or if the market is contestable. But moreover, the answer you're looking for is the above that bother Monopoly and Oligopoly will have positive profit in the long run.
Can a monopolistic competitive firm earn long run profit?
In the long run, if a firm is making a profit more firms will enter. This will cause profit to drop. Firms will eventually drop out because of this and economic profit will makes it way to zero(a result of the invisible hand).
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
Compare monopoly and monopolistic competition?
A monopoly is a market which has only one firm, the firm has market power, and there are barriers to entry. The long run profits for a monopolist may be greater than zero. Monopolistic competition is more closely related to perfect competition than monopoly. In monopolistic competition, there are many firms in the market. However, each firm has product differentiation. An example of monopolistic competition would be the jeans industry. There are many different types/quality of jeans e.g. True Religion, Levi's and Lee's. Products are somewhat differentiated, but, as in perfect competition, the long run profit = 0. Oligopoly is a market in which there are only a few firms, each firm has market power, and there is much product differentiation between the firms. The long-run profit of oligopoly can be greater than zero, because there are barriers to entry in the market.
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.
In what market structures is it possible for Firms to make positive profit in the long run?
Monopoly and Oligopoly are both the only firms that may make positive profit in the long run. Under LONG-RUN MARKET TENDENCY OF PRICE AND ATC: Monopoly P>ATC and Oligopoly P>ATC both will have postive profits, however it possible to turn to zero profits if there isn't capitalization of the profits or any rent-seeking activities or if the market is contestable. But moreover, the answer you're looking for is the above that bother Monopoly and Oligopoly will have positive profit in the long run.
Can a monopolistic competitive firm earn long run profit?
In the long run, if a firm is making a profit more firms will enter. This will cause profit to drop. Firms will eventually drop out because of this and economic profit will makes it way to zero(a result of the invisible hand).
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
Compare monopoly and monopolistic competition?
A monopoly is a market which has only one firm, the firm has market power, and there are barriers to entry. The long run profits for a monopolist may be greater than zero. Monopolistic competition is more closely related to perfect competition than monopoly. In monopolistic competition, there are many firms in the market. However, each firm has product differentiation. An example of monopolistic competition would be the jeans industry. There are many different types/quality of jeans e.g. True Religion, Levi's and Lee's. Products are somewhat differentiated, but, as in perfect competition, the long run profit = 0. Oligopoly is a market in which there are only a few firms, each firm has market power, and there is much product differentiation between the firms. The long-run profit of oligopoly can be greater than zero, because there are barriers to entry in the market.
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.
Types of profits in the long run in oligopoly?
Supernormal profits due to high barriers to entry. Profits in the long run are determined by the barriers to entry. If there is high barriers to entry, new firms cannot enter the industry easily and hence cannot competed with existing firms for profits. Existing firms would be able to enjoy supernormal profits. On the contrary, weak barriers to entry means that the long run profits would be competed away by new firms entering the industry, hence firms would earn normal profits. Oligopoly market is characterised by high barriers to entry, largely due to non-price competition such as branding, advertising, etc. High barriers could also be due to economies of scale and high fixed cost.
Briefly answer what is so bad about monopoly Can anything be good said about monopoly?
Advantages Of Monopoly* Research and Development. Supernormal Profit can be used to fund high cost capital investment spending. Successful research can be used for improved products and lower costs in the long term. E.g. Telecommunications and Pharmaceuticals. * Economies of scale. Increased output will lead to a decrease in average costs of production. These can be passed on to consumers in the form of lower prices. * International Competitiveness. A domestic firm may have Monopoly power in the domestic country but face effective competition in global markets. E.g. British Steel * A firm may become a monopoly through being efficient and dynamic. A monopoly is thus a sign of success not inefficiency.Source: Economic Help
What is the difference between monoplistic compition and perfect compition?
Monopolistic competition versus perfect competition in the long run: The most important difference between monopolistic competition and perfect competition is product differentiation. COMPARISON: Perfect competition: the long run equilibrium where MR=MC=P=AR=AC (at the minimum); Monopolistic competition: the long run equilibrium where MR=MC < P = AC (above the minimum)); This is a rather common question within the Market Structure topic in Economics. In Market Structure, the Perfect Competition (PC) and the monopoly are considered extreme market structures, while other market structures also exist, like the oligopoly and the monopolistic competition(MC). Before understanding the differences of these 2 market structure. It's important to realize that the PC market structure consists of many firms or sellers in an area or industry. The monopoly on the other hand, consists of a single seller. A good example, would be someone selling things on an island. The differences between the PC and the monopoly market structure are (1) Ease of entry and exit for firms (2) Type of product sold (3) Type of firm (4) Profit in short run and long run. First of all, is (1) ease of entry and exit for firms. For the PC market structure, new firms can easily enter the market structure, as there are no barriers of entry. This means that new firms who knows that there is a profit to be made in some area, location or industry can easily set up a new shop there. For the monopoly, there is substantial or high barriers of entry preventing new firms from entering the market structure. These barriers of entry are created by existing or dominant firms in a monopoly to prevent new firms or competitors to enter the market structure. The second difference is (2) the type of product sold. For a PC market structure, the product sold is similar. This means that what one seller is selling, is what another seller is selling. Hence products in the PC market structure are perfect substitutes. We also assume that in PC market structure, the consumers have perfect knowledge of the product. This means that the consumers are aware of the price sold in another shop. For the monopoly, the product sold are not perfect substitutes, and can be rather unique. The third difference is the (3) type of firm. Since the PC market structure faces the above 2 characteristics, this means that the firm in this market structure are powerless to influence the price. This means they have no control to increase the price of the product. This is because if they increase the price of the product, and there are perfect competition, firms who increase the price, will lose out to other firms. Hence firms in PC market structure are considered to be Price Takers. Firms in monopoly market structure on the other hand, are Price Makers. This means that they can influence the price of their product sold to consumers. The monopoly is able to do that, as the monopolist is the single seller in a market. The last difference is the (4) existence of profit. For the PC firm, there is a possibility to earn abnormal profit in the short run, but not possible in the long run. This is because, in a PC market structure, when existing firms earn profit, new firms will enter the market structure, shrinking the profit. For the monopoly, there is a possibility to earn abnormal profit in short run and long run, as there is the existence of barriers of entry to prevent new firms to enter the market.
What is an monopolistic?
Monopolistic competition is a market situation that is different from both perfect competition (PC) and monopoly. The theory of monopolistic competition was first developed by Chamberlin. In monopolistic competition the firms sell differentiated yet highly substitutable products, whereas in PC, the firms engage in production of homogeneous products. This product differentiation gives the firms a bit of monopoly power in pricing and they face slightly downward sloping demand curve as compared to the horizontal demand curve of PC. However, the free entry and exit of firms ensures that these firms have limited monopoly and no super normal profits arise in the long-run.
Using the aid of a diagram how can a perfectly competitive firm make supernormal profit in a shortrun?
It makes "supernormal profit" (aka. economic profit), by having the price exceed Average Cost. Remember that PRICE is also Average revenue AND demand. So that being said, P=AR=D. Because, if they are receiving more money than it cost them to make the product, it is profitable. It is also important to keep in mind that it is impossible for a perfectly competitive firm to make "supernormal profits" in the long run. It can only be done in the short run. That is a very basic explanation of it, as I did not even mention accounting profit. However, that should be enough info. Here's the diagram you'll want to follow: http://wpcontent.answers.com/wikipedia/en/thumb/9/90/Perfect_competition_in_the_short_run.PNG/300px-Perfect_competition_in_the_short_run.PNG
What are the feature of oligopoly?
Features of Oligopoly.The important features of oligopoly are given as follow :1. Few Sellers2. Homogeneous or differentiated products3. Entry is possible but difficult4. Interdependence5. Uncertainty6. Indeterminateness7. Price rigidity8. Non price competition9. Tendency to form cartel10. Close substitutes
