Question

In: Economics

Explain the difference between a monopolistically competitive market and a perfectly competitive market in terms of...

Explain the difference between a monopolistically competitive market and a perfectly competitive market in terms of the immediate consequence of entry by new firms.     

Solutions

Expert Solution

Both market structures (monopolistically competitive market and a perfectly competitive ) have many firms in the market and entry is easy for any other competitive firm.

However, perfect competition is price taker and product is homogeneous and monopolistically competitive firm is price maker as its product is differentiated.

When they have positive profits then other firms are attracted towards the market.

In a perfect market any new firm will have to take price that currently market is offering. In monopolistic market firm can decide own price depending upon product features even at the time of entry.

Demand curve even after new entry in Perfect competition will remain horizontal and in monopolisticaly competitive it will remain downward sloping.

In perfect competition, new firms will produce at productive and allocative efficiency which monopolisic companies will not be able to achieve.

Rahul Sunny answered 2 years ago
Next > < Previous

Related Solutions

a) State the differences between the monopolistically competitive market and perfectly competitive market. Which market is...
a) State the differences between the monopolistically competitive market and perfectly competitive market. Which market is better for consumers? Explain your answer with 5 examples from Bangladesh. b) State the nature of current market structure in Bangladesh. Discuss the problems and prospects of market structure in Bangladesh with special reference from WASA, PDB, Agricultural products, commercial banks, and Ready-made garments (RMG).
Describe the characteristics of a perfectly competitive market and a monopolistically competitive market? How are they...
Describe the characteristics of a perfectly competitive market and a monopolistically competitive market? How are they similar? How are they different?
What is the main characteristic of a monopolistically competitive market different from a perfectly competitive market?...
What is the main characteristic of a monopolistically competitive market different from a perfectly competitive market? Discuss the important implications of this difference for a monopolistically competitive firm’s demand (i.e., in regards to its price elasticity or price-cost margin, and the number of consumers), and for its short-run and long-run profits.
What is the main characteristic of a monopolistically competitive market different from a perfectly competitive market?...
What is the main characteristic of a monopolistically competitive market different from a perfectly competitive market? Discuss the important implications of this difference for a monopolistically competitive firm’s demand (i.e., in regards to its price elasticity or price-cost margin, and the number of consumers), and for its short-run and long-run profits.?
What is the main characteristic of a monopolistically competitive market different from a perfectly competitive market?...
What is the main characteristic of a monopolistically competitive market different from a perfectly competitive market? Discuss the important implications of this difference for a monopolistically competitive firm’s demand (i.e., in regards to its price elasticity or price-cost margin, and the number of consumers), and for its short-run and long-run profits.
What is the difference between a monopolistic market and a monopolistically competitive market from a long-run...
What is the difference between a monopolistic market and a monopolistically competitive market from a long-run perspective? What is the difference between a perfectly competitive market and a monopolistically competitive market in terms of the immediate consequence of the entry by new firms?  
Explain the difference between the market demand curve and the demand curve facing a perfectly competitive...
Explain the difference between the market demand curve and the demand curve facing a perfectly competitive firm. Which is more elastic? Because of an increase in the wage rate that it must pay its workers, a perfectly competitive firm’s marginal costs increase so that its marginal cost curve shifts upward. If the price of the product does not change and the firm does not shut down, in a diagram show the impact the higher wage rate has on the quantity...
1) Explain the similarities and differences between monopolistically competitive markets, monopolies, and perfectly competitive markets. 2)...
1) Explain the similarities and differences between monopolistically competitive markets, monopolies, and perfectly competitive markets. 2) Does the presence of asymmetric information in a market justify governmental intervention? Justify your answer using economic principles. 3) Explain bargaining power, the factors that determine it, and its impact in determining the outcome of negotiations.
“A perfectly competitive market provides a superior outcome relative to a monopolistically competitive market” Discuss NOTE:...
“A perfectly competitive market provides a superior outcome relative to a monopolistically competitive market” Discuss NOTE: YOUR ANSWERS IN THIS SECTION WILL BE SUBJECTED TO A PLAGIARISM CHECK AND ANY ANSWER WITH MORE THAN 20% SIMILARITY INDEX WILL BE AWARDED ZERO POINTS. YOUR ANSWER TO EACH QUESTION SHOULD NOT BE MORE THAN ONE PAGE.
Consider the monopolistically competitive market structure, which has some features of a perfectly competitive market and...
Consider the monopolistically competitive market structure, which has some features of a perfectly competitive market and some features of a monopoly. Complete the following table by indicating whether each attribute characterizes a perfectly competitive market, a monopolistically competitive market, both, or neither. Check all that apply. Attributes Perfectly Competitive Market Monopolistically Competitive Market Many sellers Easy entry Few sellers Price equals average total cost in the long run
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT