ECON101 Lecture Notes - Lecture 12: Monopolistic Competition, Perfect Competition, Marginal Revenue

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grayreindeer880

13 Jan 2017

School

University of Delaware

Department

Economics

Course

ECON101

Professor

Kievana Haynes

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Document Summary

They are tiny relative to the market a single firm only produces a small portion of the total market output. They sell exactly the same product as everyone else. Revenue: total revenue (tr): the total amount of money that the firm collects from all units sold. Total revenue = price x quantity: average revenue (ar): total revenue divided by the quantity of the product sold. (cid:1822) (cid:1822)(cid:1821) = (cid:1844) = (cid:1844) / (cid:1843) = (cid:1842) = (cid:1822) (cid:1822)(cid:1821) = (cid:1822)(cid:1821)e: marginal revenue: the change in total revenue from selling one more unit of a product. Revenue in a perfectly competitive firm: revenue for a perfectly competitive firm is easy: the firm receives the same amount of money for every unit of output it sells. Important note: the mr = mc condition can be restated as p = mc since price = Marginal revenue for a firm in a perfectly competitive market.

Related Questions

A major difference between monopolistic competition and perfect competition is:

a. there are barriers to entry in monopolistic competition. There are no barriers to entry in perfectly competitive markets.

b. monopolistically competitive firms sell differentiated products. Perfectly competitive firms sell identical products.

c. government regulation restricts the ability of monopolistically competitive firms to change their prices. Perfectly competitive firms face no price regulation.

d. the market demand curve in a monopolistically competitive market slopes downward. The market demand curve in a perfectly competitive market is horizontal

bronzecattle701

1. Markets and competition In a perfectly competitive market, all producers sell (perfectly identical/different) goods or services. Additionally, there are (few,many) buyers and sellers. Because of these two characteristics, both buyers and sellers in perfectly competitive markets are price (takers,makers)

True or False: The market for lettuce does not exhibit the two primary characteristics that define perfectly competitive markets.

1. Which of the following is a difference between a perfectly competitive market and a monopoly?

A. There are huge barriers to entry in a perfectly competitive market, while there are no barriers to entry in a monopoly.

B. The market demand curve faced by a perfectly competitive firm is horizontal, while the market demand curve in a monopoly is downward-sloping.

C. The sellers in a perfectly competitive market are price-makers, while a seller in a monopoly market is a price-taker.

D. The equilibrium price in a perfectly competitive market exceeds marginal revenue, while the equilibrium price in a monopoly equals marginal revenue.

2. Which of the following firms is likely to have the highest market power?

A. An oligopoly with homogeneous products

B. A monopoly

C. A monopolistic competitor

D. A perfectly competitive firm

graygrasshopper945

ECON101 Lecture Notes - Lecture 12: Monopolistic Competition, Perfect Competition, Marginal Revenue

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