Monopolistic competition and its features.

Question

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Answer 1

Question

Chapter 16, Problem 1CQQ

To determine

Monopolistic competition and its features.

Expert Solution & Answer

Answer to Problem 1CQQ

Option ‘b’ is the correct answer.

Explanation of Solution

Option (b):

Similar to monopoly, monopolistic markets are price setters, rather than price takers. Therefore, it does not take the price given by market conditions. Thus, option ‘b’ is correct.

Option (a):

In a monopolistic competitive market, products are differentiated; that is, it sells similar (but not identical) products of its competitors. Since the statement is a feature of monopolistic market, option ‘a’ is incorrect.

Option (c):

A monopolistic competitive market can attain profit maximization both in the short run as well as the long run. Hence, option ‘c’ is incorrect.

Option (d):

Since the monopolistic market features free entry and exit of firms in the market, option ‘d’ is incorrect.

Economics Concept Introduction

Concept introduction:

Monopolistic competition: It is an imperfect market structure in which many firms sell products that are differentiated from one another.

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Answer

M” method Given the following model, solve by the method of “M”. (see image)

As indicated in the attached image, U.S. earnings for high- and low-skill workers as measured by educational attainment began diverging in the 1980s. The remaining questions in this problem set use the model for the labor market developed in class to walk through potential explanations for this trend. 1. Assume that there are just two types of workers, low- and high-skill. As a result, there are two labor markets: supply and demand for low-skill workers and supply and demand for high-skill workers. Using two carefully drawn labor-market figures, show that an increase in the demand for high skill workers can explain an increase in the relative wage of high-skill workers. 2. Using the same assumptions as in the previous question, use two carefully drawn labor-market figures to show that an increase in the supply of low-skill workers can explain an increase in the relative wage of high-skill workers.

Answer 2

Question

Chapter 16, Problem 1CQQ

To determine

Monopolistic competition and its features.

Expert Solution & Answer

Answer to Problem 1CQQ

Option ‘b’ is the correct answer.

Explanation of Solution

Option (b):

Similar to monopoly, monopolistic markets are price setters, rather than price takers. Therefore, it does not take the price given by market conditions. Thus, option ‘b’ is correct.

Option (a):

In a monopolistic competitive market, products are differentiated; that is, it sells similar (but not identical) products of its competitors. Since the statement is a feature of monopolistic market, option ‘a’ is incorrect.

Option (c):

A monopolistic competitive market can attain profit maximization both in the short run as well as the long run. Hence, option ‘c’ is incorrect.

Option (d):

Since the monopolistic market features free entry and exit of firms in the market, option ‘d’ is incorrect.

Economics Concept Introduction

Concept introduction:

Monopolistic competition: It is an imperfect market structure in which many firms sell products that are differentiated from one another.

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Answer 3

Question

Chapter 16, Problem 1CQQ

To determine

Monopolistic competition and its features.

Expert Solution & Answer

Answer to Problem 1CQQ

Option ‘b’ is the correct answer.

Explanation of Solution

Option (b):

Similar to monopoly, monopolistic markets are price setters, rather than price takers. Therefore, it does not take the price given by market conditions. Thus, option ‘b’ is correct.

Option (a):

In a monopolistic competitive market, products are differentiated; that is, it sells similar (but not identical) products of its competitors. Since the statement is a feature of monopolistic market, option ‘a’ is incorrect.

Option (c):

A monopolistic competitive market can attain profit maximization both in the short run as well as the long run. Hence, option ‘c’ is incorrect.

Option (d):

Since the monopolistic market features free entry and exit of firms in the market, option ‘d’ is incorrect.

Economics Concept Introduction

Concept introduction:

Monopolistic competition: It is an imperfect market structure in which many firms sell products that are differentiated from one another.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 16, Problem 1CQQ

To determine

Monopolistic competition and its features.

Expert Solution & Answer

Answer to Problem 1CQQ

Option ‘b’ is the correct answer.

Explanation of Solution

Option (b):

Similar to monopoly, monopolistic markets are price setters, rather than price takers. Therefore, it does not take the price given by market conditions. Thus, option ‘b’ is correct.

Option (a):

In a monopolistic competitive market, products are differentiated; that is, it sells similar (but not identical) products of its competitors. Since the statement is a feature of monopolistic market, option ‘a’ is incorrect.

Option (c):

A monopolistic competitive market can attain profit maximization both in the short run as well as the long run. Hence, option ‘c’ is incorrect.

Option (d):

Since the monopolistic market features free entry and exit of firms in the market, option ‘d’ is incorrect.

Economics Concept Introduction

Concept introduction:

Monopolistic competition: It is an imperfect market structure in which many firms sell products that are differentiated from one another.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 16, Problem 1CQQ

To determine

Monopolistic competition and its features.

Expert Solution & Answer

Answer to Problem 1CQQ

Option ‘b’ is the correct answer.

Explanation of Solution

Option (b):

Similar to monopoly, monopolistic markets are price setters, rather than price takers. Therefore, it does not take the price given by market conditions. Thus, option ‘b’ is correct.

Option (a):

In a monopolistic competitive market, products are differentiated; that is, it sells similar (but not identical) products of its competitors. Since the statement is a feature of monopolistic market, option ‘a’ is incorrect.

Option (c):

A monopolistic competitive market can attain profit maximization both in the short run as well as the long run. Hence, option ‘c’ is incorrect.

Option (d):

Since the monopolistic market features free entry and exit of firms in the market, option ‘d’ is incorrect.

Economics Concept Introduction

Concept introduction:

Monopolistic competition: It is an imperfect market structure in which many firms sell products that are differentiated from one another.

Answer 6

Chapter 16, Problem 1CQQ

To determine

Monopolistic competition and its features.

Expert Solution & Answer

Answer to Problem 1CQQ

Option ‘b’ is the correct answer.

Explanation of Solution

Option (b):

Similar to monopoly, monopolistic markets are price setters, rather than price takers. Therefore, it does not take the price given by market conditions. Thus, option ‘b’ is correct.

Option (a):

In a monopolistic competitive market, products are differentiated; that is, it sells similar (but not identical) products of its competitors. Since the statement is a feature of monopolistic market, option ‘a’ is incorrect.

Option (c):

A monopolistic competitive market can attain profit maximization both in the short run as well as the long run. Hence, option ‘c’ is incorrect.

Option (d):

Since the monopolistic market features free entry and exit of firms in the market, option ‘d’ is incorrect.

Economics Concept Introduction

Concept introduction:

Monopolistic competition: It is an imperfect market structure in which many firms sell products that are differentiated from one another.

Answer 7

Chapter 16, Problem 1CQQ

To determine

Monopolistic competition and its features.

Answer 8

Expert Solution & Answer

Answer to Problem 1CQQ

Option ‘b’ is the correct answer.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

Option (b):

Similar to monopoly, monopolistic markets are price setters, rather than price takers. Therefore, it does not take the price given by market conditions. Thus, option ‘b’ is correct.

Option (a):

In a monopolistic competitive market, products are differentiated; that is, it sells similar (but not identical) products of its competitors. Since the statement is a feature of monopolistic market, option ‘a’ is incorrect.

Option (c):

A monopolistic competitive market can attain profit maximization both in the short run as well as the long run. Hence, option ‘c’ is incorrect.

Option (d):

Since the monopolistic market features free entry and exit of firms in the market, option ‘d’ is incorrect.