What happens in the long run for the monopolistic competition firm and for the oligopoly firm?...

What happens in the long run for the monopolistic competition firm and for the oligopoly firm? Which of the two are better for the consumer and why?

Solutions

Expert Solution

Monopolistic Competition- it can actually be mentioned that in the long run monopolistic competitions, many new firms get to enter the market this is because the short run profits gets to attract the firms to enter the market and this can get to result in zero profit in the long run.

Oligopoly -however in a market like oligopoly, firms can also get to retain profit in this is because of the fact that their high barriers to entry in the oligopoly and that makes the reason why oligopoly can get to retain profits even in the long run.

From the customer point of view, monopolistic competition get to produce a quantity which is near to the efficient level of output and this is because of the competition prevailing in the market of monopolistic world and it is nearer to the efficient level of output when compared to that of an oligopoly and that is the reason why in the long run monopolistic competition is better for the customer.

Rahul Sunny answered 5 months ago

Next > < Previous

Related Solutions

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.

The long-run profit-maximizing equilibrium of a firm in monopolistic competition in many ways is similar as...

The long-run profit-maximizing equilibrium of a firm in monopolistic competition in many ways is similar as well as different from both under monopoly and that for a firm in a perfectly competitive market. Using three separate diagrams, articulate the differences and similarities (demand conditions, cost conditions and level of profits).

2. What is the difference between monopolistic competition and oligopoly?

characteristics of perfect competition, monopoly, monopolistic competition & oligopoly

When a profit-maximizing firm in monopolistic competition is producing its long-run equilibrium quantity, A) it will...

When a profit-maximizing firm in monopolistic competition is producing its long-run equilibrium quantity, A) it will be earning economic profit. B) its price will equal its marginal cost. C) its price will be equal to its average total cost. D) its marginal revenue will exceed its marginal cost.

Answer the following questions comparing monopolistic competition to perfect competition. a. In the long run, how...

Answer the following questions comparing monopolistic competition to perfect competition. a. In the long run, how does the profit earned by a firm operating in a monopolistically competitive market compare to the profit the same firm would earn if it were instead operating in a perfectly competitive market? Please explain. b. In the long run, how does the average cost of production for a firm operating in a monopolistically competitive market compare to the average cost of production for the...

Describe and illustrate the difference between perfect competition and monopolistic competition in the long run. Comment...

Describe and illustrate the difference between perfect competition and monopolistic competition in the long run. Comment on long run profit, price sensitivities that firms are responding to as well as welfare and efficiency outcomes in both cases.

List an example of at least one firm/industry for oligopoly and one firm/industry for monopolistic competition...

List an example of at least one firm/industry for oligopoly and one firm/industry for monopolistic competition that has not already been covered in the textbook or power points. Explain the following for each market structure example: 1. Why do you think each firm would be operating in that market structure? Justify your answer. 2. Would the different firms have market power or would they be price takers? 3. How is market structure determined? 4. How much product differentiation would each...

List an example of at least one firm/industry for oligopoly and one firm/industry for monopolistic competition...

List an example of at least one firm/industry for oligopoly and one firm/industry for monopolistic competition that has not already been covered in the textbook or power points. Explain the following for each market structure example (please use complete sentences): 1. Why do you think each firm would be operating in that market structure? Justify your answer. 2. Would the different firms have market power or would they be price takers? 3. How is market structure determined? 4. How much...

What makes a business successful in monopolistic competition? Provide a short-run profit graph and long-run profit...

What makes a business successful in monopolistic competition? Provide a short-run profit graph and long-run profit graph.

Subjects