Homework Answers
14.a. Monopoly market always makes profit both in the long run as well as short run. But a perfectly competitive firms makes zero profit in long run and in short run, it can be running under losses or profits.
b. In a competitive market, profit is zero in long run because of free entry and exit of firms. But profits are positive in monopoly because of strict entry restriction. Monopolist profits encourage them to produce more, innovate more and not shut down.
While zero profits are just sufficient for competitive firms to produce.
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4. How and why does short-run equilibrium differ in competitive and monopolistic markets? Be as specific...
QUESTION 14 Outline the main assumptions of monopolistic competition. Explain, with the graphs, the short run and long...
QUESTION 14 Outline the main assumptions of monopolistic competition. Explain, with the graphs, the short run and long run equilibrium conditions of a monopolistic competitive firm (10 marks) QUESTION 15 At what price and output will a monopolist firm maximise profits and how much profit will it make? Explain with graph (10 marks) (10 marks) QUESTION 16 What conditions must hold for price discrimination to be possible? In each of the cases below, why and how does a firm choose...
1. How does the product in a monopolistic competition compare with the product in a competitive...
1. How does the product in a monopolistic competition compare with the product in a competitive market? 2. How does the seller’s demand curve in a monopolistic competition compare with the seller’s demand curve in competition? 3. Why will an monopolistic competitive firm only lose some of its customers, but not all when it raises its price? 4. What feature is the “hallmark” in monopolistic competition? 5. What short-run profit maximizing rule do monopolistic competitive firms follow? 6. If economic...
How does monopolistic competition differ from both perfect competition and monopoly? What is 'Excess Capacity' in...
How does monopolistic competition differ from both perfect competition and monopoly? What is 'Excess Capacity' in Chamberlin's model / Depict long-run equilibrium in monopolistic competition diagrammatically.
Question 2 a. With the aid of a diagram, explain why monopoly is regarded inefficient compared...
Question 2 a. With the aid of a diagram, explain why monopoly is regarded inefficient compared to perfectly competitive market. [5 marks b. hat are the FOUR (4) ways that government policymakers can respond to the problem of monopoly firm? 4 marks] c. What characteristics does monopolistic competition have in common with monopoly and perfect competition? 4 marks] d. How does the long-run equiibrium in monopolistic competition differ from the long-run equilibrium in perfect competition? Is the long-run equilibrium in...
Suppose a monopolistic competitor faces the following costs and demand in the short run: Part 1 (1...
Suppose a monopolistic competitor faces the following costs and demand in the short run: Part 1 (1 point) What is the amount of profit this monopolistic competitor will make in the short run? Part 2 (4 points) Since this is a monopolistic competitor, the number of firms competing in the long run will(a) , leading the profits for this firm to (b) If this were a monopoly instead, we would expect the number of firms to (c) and profits to (d)
1. (5 marks) If an economy is in long-run equilibrium, then why is the short-run market...
1. (5 marks) If an economy is in long-run equilibrium, then why is the short-run market supply function not a horizontal line in the perfect competitive market? 2. (5 marks) Why is the equilibrium price in the monopolist market higher than the one in the perfectly competitive market although the condition MC=MR holds in both markets?
1.In terms of perfectly competitive or monopolistic competition, determine whether one, both, or neither of the...
1.In terms of perfectly competitive or monopolistic competition, determine whether one, both, or neither of the two markets possess the following feature: The firm maximizes profit when P=MC. (may be more than 1) a) This feature is exhibited in perfect competition only. b) This feature is exhibited in a monopoly only. c) This feature is exchibited in both perfect competition and monopoly. d) This feature is exhibited in neither perfect competition or monopoly. 2.In terms of perfectly competitive or monopolistic...
How is it determined for pure competition and monopolistic competition whether the firm is operating in...
How is it determined for pure competition and monopolistic competition whether the firm is operating in the short-run or the long-run? While the demand curve for the monopoly and monopolistically competitive firm appear the same, they do differ when it comes to the elasticity of both. Which one of the two demand curves will be more elastic? Explain why.
In perfect competition as well as in monopolistic competition, a. profit is positive in a long-run...
In perfect competition as well as in monopolistic competition, a. profit is positive in a long-run equilibrium for each firm. b.entry and exit by firms are restricted. c. there are many firms in a single market. d. marginal revenue is equal to price for each firm. ECTION 22 Monopolistic competition differs from perfect competition because in monopolistically competitive markets a. all firms can eventually earn economic profits. b. each of the sellers offers a somewhat different product. C. strategic interactions...
QUESTION 7 Monopolistic competitive firms in the long run earn: positive economic profits. zero pure economic...
QUESTION 7 Monopolistic competitive firms in the long run earn: positive economic profits. zero pure economic profits. negative economic profits. Positive, zero, or negative economic profits. QUESTION 8 Which of the following statements best describes firms under monopolistic competition? Profits will be positive in the long run. Price always equals average variable cost. In the long run, positive economic profit will be eliminated. Marginal revenue equals minimum average total cost in the short run. QUESTION 9 Which of the following...
QUESTION 14 Outline the main assumptions of monopolistic competition. Explain, with the graphs, the short run and long run equilibrium conditions of a monopolistic competitive firm (10 marks) QUESTION 15 At what price and output will a monopolist firm maximise profits and how much profit will it make? Explain with graph (10 marks) (10 marks) QUESTION 16 What conditions must hold for price discrimination to be possible? In each of the cases below, why and how does a firm choose...
How does monopolistic competition differ from both perfect competition and monopoly? What is 'Excess Capacity' in Chamberlin's model / Depict long-run equilibrium in monopolistic competition diagrammatically.
Question 2 a. With the aid of a diagram, explain why monopoly is regarded inefficient compared to perfectly competitive market. [5 marks b. hat are the FOUR (4) ways that government policymakers can respond to the problem of monopoly firm? 4 marks] c. What characteristics does monopolistic competition have in common with monopoly and perfect competition? 4 marks] d. How does the long-run equiibrium in monopolistic competition differ from the long-run equilibrium in perfect competition? Is the long-run equilibrium in...
Suppose a monopolistic competitor faces the following costs and demand in the short run: Part 1 (1 point) What is the amount of profit this monopolistic competitor will make in the short run? Part 2 (4 points) Since this is a monopolistic competitor, the number of firms competing in the long run will(a) , leading the profits for this firm to (b) If this were a monopoly instead, we would expect the number of firms to (c) and profits to (d)
1. (5 marks) If an economy is in long-run equilibrium, then why is the short-run market supply function not a horizontal line in the perfect competitive market? 2. (5 marks) Why is the equilibrium price in the monopolist market higher than the one in the perfectly competitive market although the condition MC=MR holds in both markets?
In perfect competition as well as in monopolistic competition, a. profit is positive in a long-run equilibrium for each firm. b.entry and exit by firms are restricted. c. there are many firms in a single market. d. marginal revenue is equal to price for each firm. ECTION 22 Monopolistic competition differs from perfect competition because in monopolistically competitive markets a. all firms can eventually earn economic profits. b. each of the sellers offers a somewhat different product. C. strategic interactions...
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