Why is an imperfectly competitive firm considered less attractive to consumers than a perfectly competitive firm?

Expert Solution

Imperfectly competitive market consist of many firms which offers varied goods to the consumers. The firm usually charges high price for their goods compared to the firm in perfect competition. Imperfectly competitive firm does not meet the basic requirements of a perfectly competitive firm.

Perfectly competitive firm is generally considered as a price taker. The firm cannot make profits by charging high price on goods. In such a market the close of substitute of product will be available.

It is said that an imperfectly competitive firm is less attractive while compared with that of a perfectly competitive firm. It happens because the price charged by the imperfectly competitive firm will be higher than the other. The product offered by different firms in the market will be different. So that the customers cannot purchase from any other firm if a particular firm charges high price fir a good. Due to lack of competition the products offered by the firm will be poor in quality. The firms usually offer out dated goods to customers in imperfectly competitive market. The government intervention will be comparatively high in imperfectly competitive firm due to irregularity in the pricing. Such firms will not consider the needs and wants of the customers. Where as the customers get low priced and high quality goods in perfect comparative firm. The reputed and highly competitive firms exist in the perfectly competitive market. Government intervention will be very low here.

Rahul Sunny answered 2 years ago

Explain why monopolistically competitive firms are considered to be less efficient than the perfectly competitive ones...

Explain why monopolistically competitive firms are considered to be less efficient than the perfectly competitive ones in the long run despite the fact that both are operating at the break-even points.

1- For a perfectly competitive firm, marginal revenue: is less than price. is equal to price....

1- For a perfectly competitive firm, marginal revenue: is less than price. is equal to price. decreases as the firm increases output. is greater than price. 2-Which of the following are characteristics of a monopoly market structure? In a monopoly, there is only one firm in the industry. no close substitutes are available. firm(s) have little to no price-setting power. there are low barriers to entry into the market. 3-You own a small deli that sells sandwiches, salads, and soup....

If price is less than a perfectly competitive firm's average total cost, the firm will continue...

If price is less than a perfectly competitive firm's average total cost, the firm will continue to produce if price is greater than average variable cost. the firm will shut down. the firm will exit the industry in the short run. the firm will continue to produce as long as price is greater than average fixed cost.

Monopolistic competitive markets are said to be less economically efficient than perfectly competitive markets. Explain why...

Monopolistic competitive markets are said to be less economically efficient than perfectly competitive markets. Explain why this is true. Diagram the equivalent long-run equilibrium points for each to demonstrate your answer.

In the face of a positive externality, a perfectly competitive market produces less than the socially...

In the face of a positive externality, a perfectly competitive market produces less than the socially optimal quantity of output. II. If vaccinations create an external marginal benefit, the marginal social benefit of vaccinations will always exceed their private marginal benefit. III. In unregulated markets, negative externalities create deadweight losses, but positive externalities do not. IV. In the face of a negative externality, a perfectly competitive market produces more than the socially optimal quantity of output. A. I, II and...

a) Explain why the demand curve facing a perfectly competitive firm is assumed to be perfectly...

a) Explain why the demand curve facing a perfectly competitive firm is assumed to be perfectly elastic (i.e., horizontal at the going market price). b) The manufacturer of high-quality flatbed scanners is trying to decide what price to set for its product. The costs of production and the demand for the product are assumed to be as follows: TC = 500,000 + 0.85Q + 0.015Q 2 Q = 14,166 - 16.6P Determine the short-run profit-maximizing price. c) Explain why the...

Draw the following: (a) a perfectly competitive firm that earns profits (b) a perfectly competitive firm...

Draw the following: (a) a perfectly competitive firm that earns profits (b) a perfectly competitive firm that incurs losses, but will continue to operate (c) a perfectly competitive firm that incurs losses and will shut down in the short-run.

A perfectly competitive firm is said to face a perfectly elastic demand curve a.) Explain why...

A perfectly competitive firm is said to face a perfectly elastic demand curve a.) Explain why the price elasticity is so high under perfect competition: b.)What is the consequences of a perfectly elastic demand curve on the marginal revenue received by the individual perfect competitor? c.)ased on your answers to b, state the profit optimizing rule (optimal Q) to as it applies to perfect competitors ONLY:

Explain why a perfectly competitive agricultural firm (a farm) is perfectly efficient in the long run...

Explain why a perfectly competitive agricultural firm (a farm) is perfectly efficient in the long run having achieved allocative efficiency,productive efficiency, and zero economic profit.

Explain why marginal revenue is always less than average revenue(price) when demand is less than perfectly...

Explain why marginal revenue is always less than average revenue(price) when demand is less than perfectly elastic.

Question