--%>
Assignment Help - homework help

Price and output decisions in Monopolistic Competition

Illustrates the price and output decisions in Monopolistic Competition?

E

Expert

Verified

Under Monopolistic Competition the price and output decisions:

Short run period

Under short run, each existing firm is a monopolist containing a downward sloping demand curve for product of it. In order to reduce its profit the firm will produce which level of output at which MC=MR when price is more than MR, here it will be abnormal profit.

Long –Run Period

In the long period, normal profits will vanish. Latest firms will enter the industry and following expansion of output will reduce the price and only normal profit is made by the firms. Only while Average Cost (AC) equals the Average Revenue (AR), the Profit is normal. Then the equilibrium output will be at AC and MC=MR.

   Related Questions in Managerial Economics

  • Q : Introduction of the term Marginal

    Provide a brief introduction of the term Marginal Costing? And also write down the essential suppositions made by Marginal Costing?

    		•
  • Q : Define the some criticized highlight

    Define the some criticized highlight points of Adam Smith?

    		•
  • Q : Concept of derived demand The concept

    The concept of derived demand means that: (w) consumer demands for goods depend on the utilities received from their use. (x) firms’ demands for resources depend upon consumer demands for the goods produced. (y) governmental demands for social g

    		•
  • Q : Aggregate Supplies of Labor Into the

    Into the short run, the labor supply in an economy based least on: (1) population size and labor force participation rate. (2) individuals’ preferences between leisure and income from work. (3) the demand for labor. (4) rates and structures of w

    		•
  • Q : What are differences between

    What are the differences between differential cost and explicit cost?

    		•
  • Q : Marginal Product of Labor in Firm If

    If this firm maximizes profit, this will be producing under circumstances of: (1) increasing returns to labor. (2) economies of scale. (3) diminishing returns to labor. (4) constant returns to labor. (5) adverse selection and moral hazard.

    Q : Increases in demand for a resource The

    The demand for a resource would increase while the: (w) price of which resource decreases. (x) price of a substitute resource decreases. (y) consumer demand for products decreases. (z) price of a complementary resource decreases.

    		•
  • Q : Value of Marginal Product of Labor The

    The social value of the extra output by additional units of labor is: (1) marginal revenue product of labor. (2) price of labor. (3) average revenue product of labor. (4) value of the marginal product of labor. (5) marginal resource cost of labor.

    Q : Costs of investing within human capital

    The costs of investing within human capital are probably to be borne by the employee when human capital a worker obtains “on the job” is: (1) general. (2) marginal. (3) precise. (4) generic. (5) specific.

    Q : What is Demand Forecasting What is

    What is Demand Forecasting?

    		•