ECON 201 Lecture Notes - Lecture 9: Marginal Revenue, Taipei Metro, Marginal Cost

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silvergiraffe603

18 May 2016

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Imperfect competition prevails in an industry where individual sellers have some control over the price of their output. A single seller with complete control over an industry. A monopolist is the only firm producing in its industry, and there is no industry producing a close substitute. Few sellers : each individual firm can affect the market price (is all around) a large number of sellers produce differentiated products. Differentiated products are ones whose important characteristics vary, and there is easy entry and exit. Factors that make it hard for new firms to enter an industry. When barriers are high, an industry may have few firms and limited pressure to compete. Legal restrictions: governments sometimes restrict competition in certain industries. Important legal restrictions include patents, entry restrictions, and foreign-trade tariffs and quotas. High cost of entry: price of entry in some industries could be very high.

Related Questions

13. If a monopolistic competitor is producing an output for which marginal revenue is $40 and the marginal cost is $32, to maximize profits the firm should
A. decrease the level of output.
B. keep the level of output constant.
C. continue to make $8 per unit.
D. increase the level of output.

14. A monopolistic competitor will not make an economic profit unless
A. it engages in price discrimination.
B. its marginal revenue is greater than its marginal cost.
C. it faces an inelastic demand curve.
D. its price is greater than its average total cost.

15. The definition of monopolistic competition includes
A. few firms and ease of entry and exit.
B. few firms and barriers to entry and exit.
C. many firms and barriers to entry and exit.
D. many firms and ease of entry and exit.

16. Characteristics of monopolistic competition include all of the following except
A. significant barriers to entry.
B. a relatively large number of sellers and buyers.
C. small market share for each seller.
D. differentiated products.

olivecricket650

The pharmaceutical industry operates in an oligopoly. There are a limited number of firms in the industry. This is due primarily to the high fixed cost of entering the market, the high cost of research and development, obtaining patents, and dealing with mergers and acquisitions. Let us assume that over 70% of the products sold in this market are protected by patents for the next eight years.

Identify and describe the market characteristics of oligopoly.
Explain price competition in oligopoly.
Explain the barriers to entry in monopoly and oligopoly.
Does this pharmaceutical industry conform to an economist's definition of an oligopoly? Justify your response.

plumox822

there are three imperfectly competitive market structures under which, the vast majority of business operations fall. The market structures are monopolistic competition, oligopoly, and pure monopoly.describe each structure in terms of the types of products or services produced, number of firms competing in each structure (few or many), barriers to entry into the structure (high, moderate, or low), and how much control do firms in each structure have over price. Offer examples of companies classified in each.

taupemouse353

ECON 201 Lecture Notes - Lecture 9: Marginal Revenue, Taipei Metro, Marginal Cost

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