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WASTE IN IMPERFECT COMPETITION
Monopolistic competition involves some degree of waste in two aspects.
When new firms enter the industry and the demand for the individual firm's product falls it will be forced to reduce productions. This means that part of its plant equipment will be unused. It is said to be operating under conditions of excess of the demand or the market for its product.
In practice, the firm will not allow a situation where it is reduced to a state of lower than normal profits. It will try to maintain its customers against new firms through product differentiation and advertising in an effort to convince customers that its products are the best. This wastage of resources, which could be used to expand and exploit economies of scale.
Factors determining Elasticity of demand Ease of substitution. Nature of the commodity i.e. whether it is a necessity of life, luxury or addictive. Consumers
The demand curve for the product of a monopolist is a straight line such that quantity just falls to zero at a price of Rs 20 per unit and that the maximum quantity (at zero price)
The optimum output and price level is always determined with the concepts of revenue and costs-the difference in joint or independent production will show in the differences in cos
Pragmatic Managerial economics Managerial economics is pragmatic. In pure micro-economic theory, analysis is performed, based on certain exceptions, which are far from reality
present a detailed discussion of the principles of managerial economics
THE MONETARY ACCOUNT Also called official financing, this comprises the financial transactions of the government (handled by the central bank) needed to offset any net outflow
If the marginal product of L is MPL = 10K - L and the marginal product of K is MPK = 10L - K, then what is the maximum possible output when the total amount that can be spent on K
Define theVariable factor of production The input level of a variable factor of production can be diverse in the short run. Raw material inputs are believed as variable fact
Imagine of these concepts (markets, elasticity, production, costs, market structures). Take one or two of those concepts and use it to examine and understand economic situations o
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