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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.
Frank H. Knight treated profit as a residual return to uncertainly profit. Obviously knight made a distinction between risk and uncertainly he divided risk into calculable and non-
Decrease in Demand At the initial equilibrium price P 1 , quantity demanded falls from q 1 to q d . But the quantity supplied is still q 1 at this price. Hence, this
The most significant uses of the price elasticity of demand, used specifically in business decision-making. It refer to the relationship between price elasticity and the marginal c
Describe the Managerial functions A manager has to take numerous decisions that conform to the objectives of the firm. Several business decisions fall prey to conditions of ris
Case study for consumer behavior using indifference curev
Environmental issues factors This is governed by the below factors: The type of economic system of the country Business cycles Industrial policy of the countr
The Circular Flow of Income and Expenditure This is an economic model illustrating the flow of payments and receipts between domestic firms and domestic households. The househo
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decision analysis
THE STRUCTURE OF POPULATION AND SUPPLY OF LABOUR The structure (also called age distribution or composition) of population, or the number of people in the different age groups
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