Waste in imperfect competition, Managerial Economics

Assignment Help:

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.


Related Discussions:- Waste in imperfect competition

What is monopoly, Q. What is Monopoly? The term 'Monopoly' has been der...

Q. What is Monopoly? The term 'Monopoly' has been derivative of Greek term 'Monopolies' that means a single seller. So, monopoly is a market condition in that there is a single

Capital account, CAPITAL ACCOUNT This records all transactions arising...

CAPITAL ACCOUNT This records all transactions arising from capital movements into and out of the country.  There are a variety of such capital flows recorded, namely: i.

What is demand theory, What is Demand theory: Demand theory relates to ...

What is Demand theory: Demand theory relates to the study of consumer behaviour. It addresses questions like what incites a consumer to buy a particular product, why do consume

Objectives of credit control , OBJECTIVES OF CREDIT CONTROL The old ob...

OBJECTIVES OF CREDIT CONTROL The old objective of controlling credit creation by the commercial banks in the country was dictated by considerations of maintaining stability of

Substitution effect on law of demand, Substitution Effect on law of demand ...

Substitution Effect on law of demand When price of a commodity falls it becomes comparatively cheaper if price of all other related goods, particularly of substitutes, remain c

Examples of identity economics, Provide two examples of identity economics ...

Provide two examples of identity economics other than those given in the article

Determine the studies of managerial economics, Determine the studies of Man...

Determine the studies of Managerial economics Managerial economics studies the application of techniques, principles as well as concepts of economics to managerial problems of

Intellectual opponents of globalization, Consider the following hypothetica...

Consider the following hypothetical story: Last spring, there was an outbreak of a nasty disease known as cyclosporiasis, which was eventually traced to Guatemalan raspberries. Tog

The monetary account, THE MONETARY ACCOUNT Also called official financ...

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

M.E, What is the goal of a firm?

What is the goal of a firm?

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd