ECON 101 Lecture Notes - Lecture 25: Fixed Cost, Market Power, Competitive Equilibrium

102 views3 pages

cerisegiraffe538

10 Nov 2015

School

Department

Course

Professor

For unlimited access to Class Notes, a Class+ subscription is required.

hussam.sw and 39351 others unlocked

ECON 101 Full Course Notes

Verified Note

78 documents

Document Summary

Econ 101 lecture 25 monopolistic competition and game theory (oligopoly) They produce at a level below the minimum efficient scale in the long run. They produce at a level below the competitive equilibrium. Even though monopolistically competitive firms are inefficient, we as consumers like them because of thing they provide: Monopolistically competitive firms produce slightly differentiated products therefore creating slight variety within the market. The gains consumers derive from variety helps alleviate the loss due to inefficient production. In monopolistic competition, firms constantly compete with each to gain a competitive edge. One edge firms sometimes get, temporarily, is innovation/ However, it also increases a firm"s total revenue. Firms pursue innovation until the mr from innovation is equal to the mc of innovation. Product development is efficient when the msb of the innovation is equal to the msc of the innovation. Another way monopolistically competitive firms gain a competitive advantage is through marketing and advertising.

Related Questions

a) Will there be economic profits in the long run in a monopolistic competitive market? Explain your answer.

b) " Firms in monopolistic competition are not producing at minimum average cost. They are said to have excess capacity." Explain the statement. Why the firms under monopolistic competition are not producing at minimum average cost? Explain and support your answer using one example.

redcamel10

41. Critics of monopolistic competition often claim that it is inefficient because firms do not produce at the minimum of average costs in the long run. However defenders of monopolistic competition suggest that a. since economists cannot compute the average total cost of production in this type of market, they cannot prove that the inefficiency actually exist. b. monopolistic competition offers better quality service than any other kinds of market structure despite its higher prices. c. since perfect competition does not exist in the real world, monopolistic competition is the best kind of market that can be realistically expected. d. in the long run we are all dead. e. despite the higher prices of this market structure, consumers have a greater variety of goods from which to choose

21)

Compared to the results in a perfectly competitive market, a monopoly does which of the following?

	It charges a higher price.
	It charges a price greater than the marginal cost.
	It produces less output.
	All of the above
	None of the above

22)

"X-inefficiency" refers to the idea that

	government restrictions on competition create a monopoly, which results in inefficiency.
	the cost of rent-seeking activity should be added to the welfare cost of monopoly.
	Generation X is less efficient due to a lack of competitive spirit.
	a lack of competitive pressure results in a monopoly not keeping its costs down to the lowest possible level.
	price discrimination results in inefficiently low cross-elasticities of demand.

23)

Firms in which of the following market structures can engage in price discrimination?

	monopoly
	oligopoly
	monopolistic competition
	All of the above
	None of the above

24)

Monopolistic competition and perfect competition are in all of the following ways except

	Barriers to entry are low in both
	There are many firms in both
	Firms in both produce the output level where MR=MC
	Nonprice competition is important in both

25)

To get rid of excess capacity from the monopolistic competition in the long run, what would have to be given up?

	Free entry and exit.
	economic rent
	resource allocative efficiency
	differentiated product
	productive efficiency

taupeant454

ECON 101 Lecture Notes - Lecture 25: Fixed Cost, Market Power, Competitive Equilibrium

ECON 101 Full Course Notes

Document Summary

Get access

Related Documents

ECON 101 Chapter Notes - Chapter 11: Root Mean Square, Compact Car, Concentration Ratio

ECON 101 Chapter Notes - Chapter 11: Imperfect Competition, Monopolistic Competition, Edward Chamberlin

ECON 101 Lecture 24: Monopoly + Monopolistic Competition

Related Questions