ECON1131 Chapter Notes - Chapter 13: Monopolistic Competition, Average Cost, Marginal Revenue

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28 Nov 2016

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Four market structures: perfect competition, monopoly, oligopoly, monopolistic competition. Based on: the number of producers in the market, whether the goods offered are identical or differentiated. Goods hat are different but considered somewhat substitutable by consumers. Monopoly: a single producer sells a ingle, undifferentiated product. Oligopoly: a few producers sell products that may be either identical or different. Monopolistic competition: many producers each sell a differentiated product. Perfect competition: many producers each sell an identical product: also depends on how easy it is for a new company to enter the market. Monopolist: a firm that is the only producer of a good that has no close substitutes. Monopoly: an industry controlled by a monopolist. Very hard to find a monopoly since there are many regulations to prevent them. A monopolist can raise the price and lower the supply whenever it wants because they are the sole producers in the business.

Related Questions

Homework help and study guide help, all multiple choice

A monopolist:

A) can sell as much as it wants at the chosen price because it is the only seller.

B) can increase the price only if it is willing to decrease the quantity sold.

C) can increase the price and the quantity sold at the same time.

D) is not restricted by the law of demand.

A monopolistically competitive firm:

A) produces where marginal revenue equals marginal cost and charges the price consumers are willing to pay as given by the demand curve.

B) produces where marginal cost equals average total cost and charges the price consumers are willing to pay as given by the demand curve.

C) chooses price and quantity based on where the marginal cost curve meets the demand curve.

D) chooses price and quantity based on where the average total cost curve meets the demand curve.

21) Oligopoly is A) like a monopoly because there are barriers to entry. B) like perfect competition because oligopoly firms all sell homogeneous goods. C) like monopolistic competition because oligopoly firms all sell differentiated goods D) like perfect competition because there are many firms in the industry
ECON 1102 (Microeconomics) Test 4 (043015)

In ________ market structure, a firm's output depends ________.

A) an oligopoly; only on its own marginal revenue and marginal cost curves

B) a monopolistically competitive; in part on its competitors' price and quantity decisions

C) an oligopoly; in part on its competitors' price and quantity decisions

D) a monopolistically competitive; only on its marginal revenue curve

The microeconomic market structure I would like my business to be in is a monopoly in the utility industry. Using this business model to make the most amount of money, over a long period of time, without regard to service, quality, or competition could be interesting. Creating a company that could produce residual income with little effort is very appealing to the owner or its shareholders. Economies of scale will help the consumer save money when adjustments to internal costs are decreased. Once a monopoly was established you as a business owner could enjoy the benefits of no competition, depending on the product you may be able to compete internationally. The downside for consumers is with the limiting of competition there could be a limit on innovation and this could affect quality for the consumer. Depending on where an individual is in their life they may be in business to strictly make money with little regard for everyone else, if this is the case then a monopoly is the right type of business to have.

It is important to note that individuals enter business for different reason all are generally to make money but some individuals do it for other reasons as well. They may start a business in a rural area as a farmer and due to the fact that they sell fruit or vegetables would find themselves in a perfect competition market structure. This market is fairly easy to enter, there is lots of competition and the products are identical to each other between competitors. Others may start a restaurant business because they like food, they like providing and making people happy and they like the day to day interactions with people. This business is just fine and would fit into the monopolistic competition structure. This business is different from the monopoly structured business because it doesn't run itself, there is lots of competition, quality & price must always be considered, and if customers are not happy they can choose a different option.

I need a peer reply for this discussion of at least 200 words.

coffeeplatypus462

1. if the government attempts to break up a natural monopoly to enforce competition in an industry

A. the average cost of producing the good will increase

B. the smallest firm will have a significant cost advantage over the larger, less efficient firms

C. the average cost of producing the good will decrease

D. the price paid by consumers will be expected to remain the same.

2. which statement is true?

A. the monopolistic competitor always makes a profit in the short run

B. the monopolistic competitor operates at peak efficiency

C. product differentiation takes place in the minds of the buyers

D. none of these statements is true

3. Price discrimination

A. occurs when a good or service is resold

B. is prohibited by law

C. occurs when a seller charges two or more prices for the same good or service

D. occurs when the seller charges different prices for different quality products

4. Monopolistic competition may lead to each of the following except

A. inefficiency

B. overdifferentiation

C. overcapacity

D. monopoly profits

5. In the long run in monopolistic competition

A. most firms are making a profit

B. the absence of entry barriers ensures that there are no profits

C. economies of scale ensure that there are no profits

D. most firms are losing money

6. Price discrimination means

A. charging different prices for identical goods that have identical production costs

B. paying wages according to race or sex rather than productivity

C. exploiting the working masses by charging the highest single price possible.

D. eliminating all costs so that only pure profits are realized

7. The definition of monopolistic competition includes

A. few firms and ease of entry and exit

B. few firms and barrieres to entry and exit

C. many firms and barriers to entry and exit

D. many firms and ease of entry and exit

8. Which statement is true?

A. there are many firms in a monopolistically competitive industry.

B. monopolistic competitors produce an identical product

C. in order for product differentiation to take place, there must be clear physical differences amont the products sold

D. none is true

9. Long-run equilibrium for firms in monopolistically competitive industries is similar to that for firms in perfect competition in that

A. price equals minimum possible average total cost

B. price equals marginal cost

C. marginal revenue equals average total cost

D. price equals average total cost

10. Which statement is false?

A. Oligopolies are illegal in most states

B. most oligopolies engage in outright collusion

C. Ford motor company is an oligopoly

D. none of these statements is false

ECON1131 Chapter Notes - Chapter 13: Monopolistic Competition, Average Cost, Marginal Revenue

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