Question 1 3.125 out of 3.125 points The less elastic a monopolistic competitor\

Question

Question 1 3.125 out of 3.125 points The less elastic a monopolistic competitor's long-run demand curve, the: Question 2 3.125 out of 3.125 points Monopoly differs from monopolistic competition in that: Question 3 3.125 out of 3.125 points Suppose that a pure monopolist can sell 5 units of output at $4 per unit and 6 units at $3.80 per unit. The Question 4 3.125 out of 3.125 points What is NOT a reason for the rising costs in health care in the United States? Question 5 0 out of 3.125 points What are the major pros and cons of granting patent rights to inventors and companies? Question E 3.125 out of 3.125 points You are evaluating the possible merger of Honda and Philip Morris. What kind of merger is this?

Explanation / Answer

2. They are different in number of firms in the industry, product they are selling.

Monopoly is a form of market in which there exist only a single seller who sold goods which does not have close substitutes. There is barrier in the entry of new firms. Under monopoly, the firm is a price maker because it can fix the price for its product. It has free control over the supply of the product. A monopolist firm faces a market demand curve which is negatively sloped. It means that the firm will have to reduce the price to increase its sale. Demand curve of a firm under monopoly is less elastic because the product has no close substitutes. Railways in India are a monopoly industry of the Government of India. Since, there is only one producer of a product in the market, the distinction between firm and industry disappears.

Monopolistic competition refers to a market situation in which there are large number of buyers and sellers. The sellers sell closely related or differentiated products but not identical product. The products are close substitutes of each other. Product differentiation is the most important feature of monopolistic competition. Each firm under monopolistic competition enjoys the monopoly over the brand of the commodity and thus the firm has the control over the price of the commodity. Under monopolistic competition, MR < AR and AR and MR curve slope downwards and MR curve lies below AR curve. But these curves are more elastic. Example: Firms producing different brands of shampoos like Sunsilk, Pantene, Head & Shoulders, Dove etc. Monopolistic competition combines the features of monopoly and perfect competition.

3. TR at 6th unit = Price x Quantity = 3.8 x 6 = $ 22.8

TR at 5th unit = 5 x 4 = $ 20

MR at 6th unit = 22.8 - 20 = $ 2.80

If MC is less than $ 2.80 then firm will produce and sell the sixth unit.

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.