ECON 201 Study Guide - Final Guide: Monopolistic Competition, Demand Curve, Marginal Revenue
2 Oct 2018
School
Department
Course
Professor
Document Summary
A theory of market structure based on three assumptions: there is one seller. Its sells a product for which no close substitutes exist: there are extremely high barriers to entry (legal barriers, economies of scale, ownership of necessary resources) Public franchises: right granted to a firm by government that permits the firm to provide a particular good or service and excludes all others from doing the same (post office, education, water, roads, public transit) Patents: granted to inventors of a product or process for a period of 20 years. Government licenses: required to carry on a business of occupation (taxi, dentist, etc. ) Exist when inputs are increased by some percentage and outputs increase by a greater percentage causing unit costs to fall. The condition where economies of scale are so pronounced that only one firm can survive. The monopoly firm is the industry so the monopoly firm demand is the market demand curve.
