Q5) Construct a firm under pure monopolistic condition. Then 4 firms enter the market, when government...

Q5) Construct a firm under pure monopolistic condition. Then 4 firms enter the market, when government deregulate monopoly. Graphically, show that equilibrium market price in the long run, when 5 firms construct a cartel. Explain changing process in the market.

(please work on this, if you have enough knowledge about topic !!!! )

Expert Solution

LAC= LONGRUN AVERAGE COST

LMC= LONG RUN MARGINAL COST

AR= LEAD AVERAGE REVENUE

MR= LEAD MARGINAL REVENUE AND MC= LEAD MARGINAL COST

MR=MC at point E EQUILIBRIUIM

OM = OUTPUT = OP cost = AM

LAC =AR at point A therefore firm is earning normal profit

LONG-RUN EQUILIBRIUM IN MONOPOLISTIC COMPETITION

FIRMS WILL NOT EARN SUPER NORMAL PROFIT ; Chamberlin had used the word ' product group ' at the place of industry to those firms which produce differentiated product. there is freedom of entry and exit of firms in product group so all the firms obtain only normal profit . or in other words in long run due to freedom of entry of firms super normal profit are not earned
firms will not incur loss ; if any firm is getting loss in long run then it will be better to stop the production and exit from the group EQUILIBRIUM MARKET PRICE IN LONG RUN
WHEN 5 FIRMS FORM A CARTEL THEY WILL ACT LIKE MONOPOLY where MR= MC MC is horrizontal is equal to average cost there will profit equal to rectangle 's area .
IN LONG RUN in long run there will be zero economic profit because equlibrium occurs at point where average cost= demand this in case of ' cut throat competition'

Rahul Sunny answered 8 months ago

Select an industry or firm. State its market structure (pure competition, monopoly, monopolistic, or oligopoly). Next,...

Select an industry or firm. State its market structure (pure competition, monopoly, monopolistic, or oligopoly). Next, please define the characteristics of the industry or firm that support your selection of market structure. Lastly, describe and illustrate graphically the firm's profit-maximizing behavior, in particular, MR=MC under the above-mentioned market structures or conditions. In this written assignment, the quality of your writing and the application of APA format will be evaluated in addition to your content. Evaluation based on these criteria is...

Select an industry or firm. State its market structure (pure competition, monopoly, monopolistic, or oligopoly). Next,...

Select an industry or firm. State its market structure (pure competition, monopoly, monopolistic, or oligopoly). Next, please define the characteristics of the industry or firm that support your selection of market structure. Lastly, describe and illustrate graphically the firm's profit maximizing behavior in particular MR=MC under the above-mentioned market structures or conditions. In this written assignment, the quality of your writing and the application of APA format will be evaluated in addition to your content. Evaluation based on these criteria...

Select an industry or firm. State its market structure (pure competition, monopoly, monopolistic, or oligopoly). Next,...

Select an industry or firm. State its market structure (pure competition, monopoly, monopolistic, or oligopoly). Next, please define the characteristics of the industry or firm that support your selection of market structure. Lastly, describe and illustrate graphically the firm's profit maximizing behavior in particular MR=MC under the above-mentioned market structures or conditions.

8. Consider a firm producing under conditions of pure competition, in a market characterized by the...

8. Consider a firm producing under conditions of pure competition, in a market characterized by the following demand and supply conditions: P = 200 – Qd (Demand); P = 100+ Qs (Supply) a) What is the market equilibrium price and quantity? b) If a representative firm has a Marginal Cost function that is depicted below, at what level of output would it maximize its individual profits? MC = 50 + 100q c) If all of the firms were identical, how many...

state and explain circumstances under which a firm may acquire monopolistic power in the market.

Is it true in the long-run, a firm under monopolistic competition has market power but earns...

Is it true in the long-run, a firm under monopolistic competition has market power but earns no profit? Explain.

Briefly state the basic characteristics of pure competition, pure monopoly, monopolistic competition, and oligopoly. Under which...

Briefly state the basic characteristics of pure competition, pure monopoly, monopolistic competition, and oligopoly. Under which of these market classifications does each of the following most accurately fit? In each case, justify your classification. a. a supermarket in your hometown b. the steel industry c. a Kansas wheat farm d. the commercial bank in which you or your family has an account e. the automobile industry.

Economists develop and apply models of market competition (pure competition, pure monopoly, monopolistic competition, oligopoly) to...

Economists develop and apply models of market competition (pure competition, pure monopoly, monopolistic competition, oligopoly) to describe the conditions that impact price and output decisions made by managers of organizations. Real world markets can be described as existing along a continuum and exhibiting elements of competition and monopoly. Explain what is meant by that statement. In your response, identify some measures and characteristics that economists use to describe different market structures (i.e. how do economists distinguish between market structures?).

Design a company that operates in pure monopoly conditions. When the government regulates the market within...

Design a company that operates in pure monopoly conditions. When the government regulates the market within the framework of deregulation policies, whether four firms have joined the market, come together and show the monopolization of the firms operating in the same field, and show the market equilibrium price of the firms on the chart in the long run. Describe the process of change in the market.

Based on the pure expectations theory, if the implied forward rates under the no-arbitrage condition are...

Based on the pure expectations theory, if the implied forward rates under the no-arbitrage condition are lower than spot rates of matching maturities, then the spot rate curve is most likely Group of answer choices flat downward sloping upward-sloping

Question

Q5) Construct a firm under pure monopolistic condition. Then 4 firms enter the market, when government...

Solutions

Expert Solution

Related Solutions

Select an industry or firm. State its market structure (pure competition, monopoly, monopolistic, or oligopoly). Next,...

Select an industry or firm. State its market structure (pure competition, monopoly, monopolistic, or oligopoly). Next,...

Select an industry or firm. State its market structure (pure competition, monopoly, monopolistic, or oligopoly). Next,...

8. Consider a firm producing under conditions of pure competition, in a market characterized by the...

state and explain circumstances under which a firm may acquire monopolistic power in the market.

Is it true in the long-run, a firm under monopolistic competition has market power but earns...

Briefly state the basic characteristics of pure competition, pure monopoly, monopolistic competition, and oligopoly. Under which...

Economists develop and apply models of market competition (pure competition, pure monopoly, monopolistic competition, oligopoly) to...

Design a company that operates in pure monopoly conditions. When the government regulates the market within...

Based on the pure expectations theory, if the implied forward rates under the no-arbitrage condition are...