Features of monopolistic competition, Microeconomics

Assignment Help:

Features of monopolistic competition:

Large number of firms in the industry. There are many small firms each supplying only a small share of the total market output. Hence, no firm has any perceptible influence on the price and output decisions of other firms in the industry.

Product differentiation. The firms supply products that are differentiated i.e. similar but not identical. Therefore, each firm has some degree of market power, especially some discretion as to what price to charge for its products.

Freedom of entry and exit of firms. Barriers to entry are relatively small or non- existent, and productive resources are highly mobile. Product differentiation tends to facilitate the entry of new firms in the industry.

Nature of demand curve. The demand curve for each firm’s product is downward sloping and highly price elastic due to the large number of close substitutes. Price must be lowered to sell a large quantity hence, MR curve also slopes downward and falls below the demand curve.


Related Discussions:- Features of monopolistic competition

Moving average methods, Moving Average Methods: Under this methods the movi...

Moving Average Methods: Under this methods the moving average to the sales of the past years is computed. The computed moving average is taken as forecast for the next year or peri

Financial economies, Financial Economies: These are benefits obtained...

Financial Economies: These are benefits obtained by large firms as a result of contracting credit from financial institutions at lower interest rates than smaller firms. The

Pareto optimacy, what are criteria and conditions for pareto optimacy

what are criteria and conditions for pareto optimacy

Shortrun, the short run can be defined as any period of time

the short run can be defined as any period of time

Demand and supply, (1) The demand curve for oranges is given by the equatio...

(1) The demand curve for oranges is given by the equation P = 5 – Q/200. The supply curve is given by P = Q/800. Q is measured in oranges per day and price is measured in dollars p

What is the distinguishes a progressive income tax, What is the distinguish...

What is the distinguishes a progressive income tax, from a proportional income tax, or a regressive income tax? A proportional income tax takes the similar percentage of a pe

Examine the role of foreign direct investment, Examine the role of foreign ...

Examine the role of foreign direct investment (FDI) for developing countries Explanation of foreign direct investment as the direct ownership of capital in another country by a

User cost of capital, User Cost of Capital = Economic Depreciation + ...

User Cost of Capital = Economic Depreciation + (Interest Rate)(Value of Capital) - Example An Airline buys Boeing 737 for $150 million with the expected life of 30

ELASTICITY, WHAT ARE THE PRACTICAL IMPORTANCE OF INCOME ELASTICITY OF DEMAN...

WHAT ARE THE PRACTICAL IMPORTANCE OF INCOME ELASTICITY OF DEMAND?

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

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!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd