Question
In: Economics
What does the supply curve look like for a monopolistically competitive market A Part of MC...
What does the supply curve look like for a monopolistically
competitive market
A Part of MC curve
B U-shaped
C Downward Sloping
D There is no supply curve in a monopolistically competitive
market
Solutions
Expert Solution
In monopolistic competition, each firm is producing differentiated product so they have some market power.
Generally supply curve explains the one to one relationship between price and quantity supplied. But here in this market form there is no such relation that is it is not necessary that a firm will always increase its output with increase in market price or decrease its output with decrease in price. In perfect competition as firms are choosing equilibrium point where Price=MC so they choose to produce according to the MC so part of MC is supply curve in perfect competition. But here in monopolistic competition firm maximizes profit where MR=MC and Choose quantity and price relationship through demand curve. So part of MC can not be a supply curve here.
No linear relationship between price and output produced cause no supply curve.
Correct option:
D) There is no supply curve in a monopolistically competitive market
Rahul Sunny answered 1 year agoRelated Solutions
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QUESTION 16
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0.4 points
QUESTION 17
Which of the following statements is true about sunk costs of a
competitive firm?
A.
They are part of the variable costs
B.
Rational people ignore them when making long-run decisions...
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
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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 makes a monopolistically competitive market different from a purely competitive market or a monopolist?
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