Compared between monopoly and perfect competitive market

Reference no: EM13696699

1. Compared between monopoly and perfect competitive market, there is no deadweight loss in the latter one, so the market is claimed to be the most (static) efficient. What is deadweight loss? Why the standard theory says it is bad to society? Now, DWL emerges in monopoly as we must assume both markets have identical MC and Demand curves. Why we need to assume that and why this assumption might be invalid?

2. Conventional textbook championed perfect competitive market as it produces highest static efficiency. However, some economists argue that markets especially in the long run rather require dynamic efficiency. What is the static efficiency in perfect competitive market? How it differs from dynamic efficiency? Why perfect competition is less likely to innovate?

Reference no: EM13696699

Questions Cloud

Market and individual demand curves : Which best expresses the relationship between the market and individual demand curves?

Effect of a trading partner who imposes binding import quota : The effect of a trading partner who imposes a binding import quota on the good the home country is export subsidizing? Who are the winners and losers under these circumstances?

The finance department predicts dropping the price : The advertising department expects the next $20,000 in ad spend should increase sales by 5,000 units to 50,000 while maintaining the current price of $5.00. The finance department predicts dropping the price by $1.00 will increase sales by 15,000 to ..

How is total risk measured-what is a portfolio : How is total risk measured? What is a portfolio? Why is the standard deviation of a portfolio less than the average standard deviation of the assets in the portfolio? What is systematic risk? What are the other names for it? What is unsystematic risk..

Compared between monopoly and perfect competitive market : Compared between monopoly and perfect competitive market, there is no deadweight loss in the latter one, so the market is claimed to be the most (static) efficient. What is deadweight loss? Why the standard theory says it is bad to society? Now, DWL ..

What should the manufacturer do to stop losing money : In the late 1990s, car leasing was very popular in the United States. A customer would lease a car from the manufacturer for a set term, usually two years, and then have the option of keeping the car. If the customer decided to keep the car, the cust..

Possibility of greece leaving the euro zone : In the past couple of years, there was much talk about the possibility of Greece leaving the euro zone and reinstating its earlier currency, the drachma. If Greece did leave the euro zone and reinstate the drachma, what do you think the US$/drachma e..

Domestic economy and its international transactions : Discuss the impact of the recent (2008 to the present) international financial upheaval on Kenya domestic economy and its international transactions

Difference between adverse selection and moral hazards : Difference between adverse selection and moral hazards? Use detailed examples to explain what the two concepts imply. In the context of your examples, discuss how the problems associated with moral hazards and adverse selection can be resolved.

User Account

All Pages