Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Theories of Chamberlin’s monopolistic competition and Joan Robinson’s imperfect competition have revealed that a firm under monopolistic competition or imperfect competition in long run equilibrium produces an output which is less than socially optimum or ideal output. This means that firms operate at the point on the failing portion of long run average cost curve, that is, they do not produce the level of output at which long run average cost is minimum. Long run equilibrium of a firm under monopolistic competition is achieved when the demand curve facing a firm becomes tangential to the long run average cost curve so that it earns only normal profits. Under such circumstances a firm can reduce average cost by expanding output to the minimum level of long run average cost, but it will not do so because its profits are maximized at the level of output smaller than at which its long run average cost is minimum.
Society’s productive resources are fully utilized when they are used to produce the level of output which renders long run average cost minimum. Thus a monopolistically competitive firm produces less than the socially optimum or ideal output, that is, the output corresponding to the slowest point of long run average cost curve. This is in sharp contrast to the position of the firm in long run equilibrium under perfect competition, which operates at the minimum point of the long run average cost curve. The amount by which the actual long run output of the firm under monopolistic competition falls short of the socially ideal output is a measure of excess capacity which means unutilized capacity.
Long run equilibrium of a firm under monopolistic competition is achieved when the demand curve facing a firm becomes tangential to the long run average cost curve so that it earns only normal profits. Under such circumstances a firm can reduce average cost by expanding output to the minimum level of long run average cost, but it will not do so because its profits are maximized at the level of output smaller than at which its long run average cost is minimum. Therefore, the firm is producing MN less than the ideal output. Thus MN output represents the excess capacity refers only to the long run. This is because in the short run under any type of market structure (including perfect competition) there can be all sorts of departments from the ideal reflecting incomplete adjustment to the existing market conditions.
1. Consider the following 2-way ANOVA Table with the group number listed in the cells of the table. Factor B=1 B=2 B=3 B=4
Problem: (a) Why is an error term added to a regression and explain its importance in the OLS procedure? (b) Suppose we have a linear equation with a constant term, one expl
Sir/Ma''am i have to make a project of 4-5 page on Investigating the buying behavior of individuals in the white goods sector and seeing if there exists any negative relationship b
definetion of pricing thery
Distinction Between Cost and Expenditure As has already been defined, cost is the money equivalent of material and human resources needed to produce a good or a service. Expen
THEORY OF INTER-TEMPORAL CONSUMPTION: In the previous two units, we have been concerned with choices among contemporaneous commodities. An important class of choices made by c
what is the application of consumer surplus
explain the concept economies/diseconomies of scale and minimum efficient scale
what is free market?
Why is the concept of scarcity relevant to both LDC s and MDC s? All societies throughout time have wrestled with the basic economic conundrum of having needs that cannot be me
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd