Answer the following Questions:
1- Why Monopoly can Occur:
2- How a Monopolist determines how much output to produce and what price to charge.
3- What are the key characteristics of a Monopolistically Competitive Industry?
4- Contrasting the output and pricing decsions of monopolistically competitive firms with those of perfectly competitive firms:
5- Why Brand Names and advertising are important features of monopolistically competitive industries:
- 老古Lv 71 decade agoFavorite Answer
1- Why Monopoly can Occur:
In Economics, a monopoly exists when a specific individual or enterprise has sufficient control over a particular product or service to determine significantly the terms on which other individuals shall have access to it. Monopolies are thus characterized by a lack of economic competition for the good or service that they provide and a lack of viable substitute goods.
2- How a Monopolist determines ........to charge.
Regardless of the type of firm, the profit maximizing price and quantity choice will equate the marginal cost and marginal revenue of production . The key difference is in the outcome of such a rule: typically a monopoly selects a higher price and lower quantity than a price-taking firm.
5- Why Brand Names ...... competitive industries:
The characteristics of a monopolistically competitive market are almost the same as in perfect competition, with the exception of heterogeneous products, and that monopolistic competition involves a great deal of non-price competition (based on subtle product differentiation). A firm making profits in the short run will break even in the long run because demand will decrease and average total cost will increase. This means in the long run, a monopolistically competitive firm will make zero economic profit. This gives the company a certain amount of influence over the market; because of brand loyalty, it can raise its prices without losing all of its customers. This means that an individual firm's demand curve is downward sloping, in contrast to perfect competition, which has a perfectly elastic demand schedule. This is why brand name and advertising are important in a monopolistically competitive industry.
2008-10-03 16:31:11 補充：
3- What .....itive Industry?
There are many producers and many consumers in a given market.
Consumers perceive that there are non-price differences among the competitors' products.
There are few barriers to entry and exit.
Producers have a degree of control over price.
2008-10-03 16:33:54 補充：
2008-10-03 16:43:42 補充：
2008-10-03 16:45:44 補充：
不知何故, 說字數太多, 請回去參考補充說明的附件.Source(s): , A monopoly will sell a lower quantity of goods at a higher price than firms would in a purely competitive market. The monopoly will secure monopoly profits by appropriating some or all security of the stop consumer surplus. Since the loss in consumer surplus is higher than the monopolist's gain, this creates deadweight loss, which is inefficient and a form of market failure.