ECON 1B03 Chapter Notes - Chapter 10: Monopolistic Competition, Perfect Competition, Demand Curve
36 views2 pages
15 Jun 2017
School
Department
Course
Professor
![ECON 1B03 Full Course Notes](https://new-docs-thumbs.oneclass.com/doc_thumbnails/list_view/2152268-class-notes-ca-mcmaster-econ-1b03-lecture1.jpg)
46
ECON 1B03 Full Course Notes
Verified Note
46 documents
Document Summary
Each firm"s product is slightly dif. from the other, thus each firm has a downward sloping demand curve just like a monopoly. Freedom to enter or exit whenever, just like perfect competition. Due to unique products, firms can set their own prices to some degree. Max profit at mc=mr, and just like a monopoly, uses this to find q and sets q into demand curve to find p. In the sr, this behaves just like a monopoly. Sr economic profits attract new entries to the market, increasing number of products offered, therefore entry of a new firm will reduce demand faced by already present firms, shifting their demand curves to the l and their profits decline. P>mc and p>mr. due to this, an extra unit sold at the going price will still add more to total revenue than to price. This makes a firm want to sell more and they do so by advertising.
Get access
Grade+
$40 USD/m
Billed monthly
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
10 Verified Answers
Class+
$30 USD/m
Billed monthly
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
7 Verified Answers