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Terms in this set (11)1. Describe the three attributes of monopolistic competition. How is monopolistic competition like a monopoly? How is it like perfect competition? 1. A monopolistic competition- features a large number of competing firms, but the products that they sell are not identical 2. A monopolistic Competition- can raise its price without losing all of its customers or lower the price and gain more customers 3. In a monopolistic competition-There are many sellers; (2) each seller produces a slightly different product; and (3) firms can enter or exit the market without restriction Monopolistic competition is like a monopoly because firms face a downward-sloping demand curve, so price exceeds marginal cost. How the perfectly competitive and monopolistic industry makes the decision on how much to charge for their product? Why it is hard for oligopoly to decide how much to charge for their product? 1.) In a perfectly competitive market- seller are given a market price and multiplying it by the quantity of output that the firm chooses. they can not control price, but the quantity of output to produce. 2.) A monopolistic competition industry will produce a lower quantity of a good and charge a higher price for it than would a perfectly competitive industry. As long as P>MC 3) It's hard for them to decide how much to charge because they face the temptation to go against each other, but the firms have to work with each other in order to make higher profits. In a monopolistically competitive market, can firms earn economic profit in the short-run and in the long run? Explain. •The monopolistically competitive market can earn profit in the short run and losses in the short run. •Monopolistic competition is like perfect competition because, in the long run, price equals average total cost, as free entry and exit drive economic profit to zero.
Economic loses, Gain and profit is Zero when? • Economic loses is when ATC>P How does a monopolistically competitive firm decide how much to sell and at what price? Set MR=MC and price is higher than marginal revenue, not equal to it because the demand curve is downward sloping. When P>MC, the benefits to society of providing additional quantity, as measured by the price that people are willing to pay, exceed the marginal cost to society of producing those units. A monopolistic competition industry will produce a lower quantity of a good and charge a higher price for it than would a perfectly competitive industry. the marginal costs to society of producing those units When P > MR, which is the outcome in a monopolistically competitive market, the benefits to society of providing additional quantity, as measured by the price that people are willing to pay. Does a monopolistic competitive firm produce the most efficient level of output? Should government regulate such firms? A monopolistic competitive firm does not produce the most efficient level of output because: The end result of entry and exit is that firms end up with a price that lies on the downward-sloping portion of the average cost curve, not at the very bottom of the AC curve. Thus, monopolistic competition will not be productively efficient. Monopolistic competition- determine the level of output based on price and therefore they will have to limit their quantity in order to gain a profit which is not as efficient compared to the perfect competition. Our government should regulate when the prices are too high, but not in quantity. Therefore, I do not think our government should intervene. Why do oligopolies exist? An oligopoly occurs when a few large businesses control the supply and availability of a certain product. They can control price and eliminate competition. Why is the pricing decision of an oligopolistic more complicated than it is for firms in the other market structures? When oligopoly firms in a certain market decide what quantity to produce and what price to charge, they face a temptation to act as if they were a monopoly. If a group of sellers could form a cartel, what quantity and price would they try to set? They would choose to produce the monopoly quantity, acting in collusion as if they were a monopoly. counting on the other oligopolists to hold down their production and keep prices high. In other words, if that market goes against each other they are not going to make the most profit since it will drive down the market. Eventually to a perfectly competitive market. What is the prisoners' dilemma, and what does it have to do with oligopoly? Prisoner's dilemma is where having self-interest can cause harm to society or someone. Prisoner's dilemma works by the gains from cooperation are larger than the rewards from pursuing self-interest Meaning, if each of the oligopolies cooperates in holding down output, then high monopoly profits are possible. Prisoner's dilemma is why two completely rational individuals might not cooperate, even if it appears that it is in their best interests Students also viewedCh. 16 Monopoly Practice Problems6 terms Jbae707 Microeconomics: Chapter 16. Monopolistic Competiti…17 terms lance_harder Econ 201- Chapter 1714 terms simi_kashyap Microeconomics - Ch.1615 terms SomeDude722 Sets found in the same folderEcon 202 Final exam78 terms crisbossx96 Econ 201: Chapter 1514 terms KayleighScherzer Chapter 13 Questions for Review8 terms maddymaas Microeconomics: Chapter 16. Monopolistic Competiti…17 terms lance_harder Other sets by this creatorBible vocabulary4 terms crisbossx96 Bible vocabulary3 terms crisbossx96 legal comparative law5 terms crisbossx96 HESI 418D33 terms crisbossx96 Verified questions
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question An insurance company that provides medical insurance is concerned with recent data. They doubt that patients who undergo surgery at large hospitals have their discharges delayed for various reasons- which results in increased medical costs to the insurance company. The recent data for area hospitals and two types of surgery (major and minor) are displayed in the following table. | | Large Hospital | Small Hospital | | :--- | :---: | :---: | | Major Surgery | 120 of 800 | 10 of 50 | | Minor Surgery | 10 of 200 | 20 of 250 | d) What were the delay rates at each hospital for each type of surgery? Verified answer Recommended textbook solutionsFundamentals of Engineering Economic Analysis1st EditionDavid Besanko, Mark Shanley, Scott Schaefer 215 solutions
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What is a major difference between monopolistic competition and perfect competition quizlet?What is the difference between perfect competition and monopolistic competition? In perfect competition, firms produce identical goods. While monopolistic competition firms produce slightly different goods.
Which is the main difference between perfect competition and monopolistic competition brainly?In perfect competition, the products are identical in shape, size, quality etc. whereas, in monopolistic competition the products are differentiated according to colour, size, brand etc. Firm, in perfect competition, determines the price while firms under monopolistic competition can partly control market price.
What is the difference between perfect competition and monopolistic competition Quizizz?In perfect competition the firms all sell products that are exactly the same, but in monopolistic competition each firm sells a slightly differentiated product.
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What is the main difference between perfect competition and monopolistic competition quizlet?
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