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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3. Consider a course allocation problem with strict and non-responsive preferences. Isthere a mechanism that is efficient and strategy-proof? If so, state the mechanismand show that it satisfies efficiency and strategyproofness. {hint serial dictatorship and show using example}4. Consider a course allocation problem with responsive preferences and at least 3students. Is there a mechanism that is efficient and strategy-proof that is not theSerial Dictatorship? If so, state the mechanism and show that it satisfies efficiencyand strategyproofness.5. Suggest a mechanism for allocating students to courses in a situation where preferences are non-responsive, and study its properties (efficiency and strategyproofness). Please be creative

3. Consider a course allocation problem with strict and non-responsive preferences. Isthere a mechanism that is efficient and strategy-proof? If so, state the mechanismand show that it satisfies efficiency and strategyproofness. {hint serial dictatorship}4. Consider a course allocation problem with responsive preferences and at least 3students. Is there a mechanism that is efficient and strategy-proof that is not theSerial Dictatorship? If so, state the mechanism and show that it satisfies efficiencyand strategyproofness.5. Suggest a mechanism for allocating students to courses in a situation where preferences are non-responsive, and study its properties (efficiency and strategyproofness). Please be creative

2. a) Consider a market where one firm (firm 1) currently produces, but a second firm (firm 2) is intending to enter and sell an identical product. The market has inverse demand given by p = 40 – Q, where Q is the total output sold in the market. Firm 1 has a marginal cost of 16 and firm 2 has a marginal cost of c < 16, with no fixed cost for either firm. Firm 2 has a choice of competing on price or quantity, with firms making their choices simultaneously (i.e. the market will be either a Bertrand or Cournot duopoly). If you were advising firm 2 on entering this market, how would you advise it to compete? To what extent would the size of firm 2’s cost advantage affect your advice? b) Now assume that firm 2 is aware that other firms are considering entering the market, so the market may over time change from a duopoly to an oligopoly with more than two firms. This would not change the nature of competition (i.e. any additional firms would set price or quantity in line with the first…

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.

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 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.