Assumptions of monopolistic competition, Managerial Economics

Assumptions of Monopolistic Competition

Monopolistic competition as the name implies, combines features from both perfect competition and monopoly.  It has the following features from perfect competition.

i. There are many producers and consumers.  The producers produce differentiated substitutes.  Hence there is competition between them.  The difference from perfect competition is that the products area not homogeneous.

ii. There is freedom of entry into the industry so that an individual firm can make surplus profits in the short-run but will make normal profits in the long-run as new firms enter the industry.

Posted Date: 11/28/2012 5:27:49 AM | Location : United States







Related Discussions:- Assumptions of monopolistic competition, Assignment Help, Ask Question on Assumptions of monopolistic competition, Get Answer, Expert's Help, Assumptions of monopolistic competition Discussions

Write discussion on Assumptions of monopolistic competition
Your posts are moderated
Related Questions
The concept of point elasticity is applicable where change in price and the resulting change in quantity are infinite or small. Though, where change in price and consequent hunger

Q. Central characteristics of Simon satisfying behaviour model? The pattern of policy commitments which result from the bargaining process can be seen to be a specification of

MONOPOLISTIC PRACTICES The following practices may be said to characterize monopolies. Exclusive dealing to supply and collective boycott Producers agree to supply onl

THE KEYNESIAN THEORY OF CONSUMPTION FUNCTION The theory was developed during the Great Depression which plagued Europe and America.  During this time, there was excess capacit

250 word essay: A New Hampshire resort offers year-round activities: in winter, skiing and other cold-weather activities; in the summer, golf, tennis, and hiking. The resort’s oper

Collective bargaining Collective bargaining  refers to the whole process by which trade unions and employers (or their representatives) arrive at an enforce agreements.  Tra



Q. Explain the Efficiency wage model? Efficiency wage models such as Shapiro and Stiglitz (1984) suggest wage rents as an addition to monitoring, because this gives employees a

Stable and Unstable Equilibrium An equilibrium is said to be stable equilibrium when economic forces tend to push the market towards it.  In other words, any divergence from t