c. Compare the profit-maximizing conditions under monopoly to those under oligopoly. d. Compare the profit-maximizing conditions...

c. Compare the profit-maximizing conditions under monopoly to those under oligopoly.

d. Compare the profit-maximizing conditions under monopolistic competition to those under perfect competition both in the long-run.

Solutions

Expert Solution

Profit maximizing conditions under monopoly and oligopoly

When the marginal revenue equals the marginal cost the profit maximizing level of output is determined.
In monopoly on competition exists and so they keeps the prices of the products much high. Whereas, in oligopoly there is competition and they have to wait for the other firms to decide the price.
The product prices are set based on the price of the same product which the other producers had set. But in case of monopoly its just the opposite.
Price discrimination exists in monopoly, but in oligopoly the prices remain fixed.

Profit maximizing conditions under monopolistic competition and perfect competition

In monopolistic competition the price is higher than the marginal cost. But in perfectly competitive market the price is pareto optimal.
There are highly differentiated products in monopolistic market. Whereas, the products of the perfectly competitive market are absolute substitutes to each other.
As the monopolistic markets are price setters they can maximize their profit by getting influenced by the market forces. But in perfect competition the prices cannot be charged according to the market influences.
The monopolistic markets produces goods to maximize its profit where marginal revenue equals the marginal cost. It experiences super normal profits, but in perfect competition there are only normal profits.

Rahul Sunny answered 1 year ago

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