Question and answer
what role does monopolistic competition play in the economy
Monopolistic competition is a type of imperfect competition such that one or two producers sell products that are differentiated from one another as goods but not perfect substitutes (such as from branding, quality, or location). [ In monopolistic competition, a firm takes the prices charged by its rivals as given and ignores the impact of its own prices on the prices of other firms.[1] In a
monopolistically competitive market, firms can behave like monopolies in the short run, including by using market power to generate profit. In the long run, however, other firms enter the market and the benefits of differentiation decrease with competition; the market becomes more like a perfectly competitive one where firms cannot gain economic profit. In practice, however, if consumer rationality/innovativeness is low and heuristics are preferred, monopolistic competition can fall into natural monopoly, even in the complete absence of government intervention.[2] In the presence of coercive government, monopolistic competition will fall into government-granted monopoly. Unlike perfect competition, the firm maintains spare capacity. Models of monopolistic competition are often used to model industries. Textbook examples of industries with market structures similar to monopolistic competition include restaurants, cereal, clothing, shoes, and service industries in large cities. The "founding father" of the theory of monopolistic competition is Edward Hastings Chamberlin, who wrote a pioneering book on the subject, Theory of Monopolistic Competition (1933).[3] Joan Robinson published a book The Economics of imperfect competition' with a comparable theme of distinguishing perfect from imperfect competition. Monopolistically competitive markets have the following characteristics: There are many producers and many consumers in the market, and no business has total control over the market price. Consumers perceive that there are non-price differences among the competitors' products. There are few barriers to entry and exit.[4] Producers have a degree of control over price. The long-run characteristics of a monopolistically competitive market are almost the same as a perfectly competitive market. ]
Expert answered|sweetypie1431|Points 126|
Question
Asked 8/19/2012 6:58:28 PM
0 Answers/Comments
Get an answer
New answers
Rating

There are no new answers.

Comments

There are no comments.

Add an answer or comment
Log in or sign up first.
Questions asked by the same visitor
what role does a monopoly plays in the economy'
Weegy: A monopoly occurs when only one company sells a particular product on the market. [ [ A 'natural monopoly' A natural monopoly occurs when the type of industry makes it financially impractical, if not impossible, for multiple companies to engage in the business. 'Geographic monopolies' occur when there is only one company that offers a particular good or service in an area. 'Technological monopolies' occur when the good or service the company provides is has legal protection in the form of a patent or copyright. Finally, a 'government monopoly' exists when a a government passes laws reserving a specific trade, product or service for government agencies. ] ] (More)
Question
Expert Answered
Asked 8/18/2012 5:10:35 PM
0 Answers/Comments
21,750,167 questions answered
Popular Conversations
There is a single instrument to measure climate change.
Weegy: There is a single instrument to measure climate change. FALSE. User: How do landfills contribute to global ...
7/29/2015 8:14:02 AM| 2 Answers
Which of the following is the best example of use of voice in a ...
Weegy: The answer is: D. a narrative about the food served in middle-school cafeterias. User: What is the best word ...
7/29/2015 9:00:04 AM| 2 Answers
After Alexander's death, Egypt was ruled by ...
Weegy: After Alexander's death, Egypt was ruled by Ptolemy. User: The philosophy that believed pleasure was the ...
7/29/2015 4:01:30 PM| 2 Answers
16. What kind of wines is Portugal most famous for? A. ...
Weegy: D. Port User: 17. The single most important ingredient in a good beer is high-quality A. malt. ...
7/29/2015 5:23:37 PM| 2 Answers
Choose the correct definition for extremo. A. extra B. ...
Weegy: end is the correct definition for extremo. User: Choose the correct translation for Yo puedo hacerlo. ...
7/29/2015 6:40:23 PM| 2 Answers
Solve this inequality: 9h + 2 User: Solve the following equation: 6y ...
Weegy: 80 = 3y + 2y + 4 + 1, 80 = 5y + 5, 75 = 5y, divide both sides by 5 to get y = 15. The answer is A. y = 15. ...
7/29/2015 8:20:56 PM| 2 Answers
Solve the following inequality: 38 4 B. x > 28 C. x User: Solve ...
Weegy: 3q + 5 + 2q ? 5 = 65 5q = 65 q = 65/5 q = 13 User: The spoke of a wheel reaches from the center of the ...
7/29/2015 8:25:32 PM| 2 Answers
Weegy Stuff
S
1
L
Points 823 [Total 1334]| Ratings 1| Comments 813| Invitations 0|Online
S
P
C
L
P
L
1
P
P
1
P
1
P
L
Points 673 [Total 10207]| Ratings 3| Comments 623| Invitations 2|Online
S
L
L
Points 344 [Total 8544]| Ratings 5| Comments 294| Invitations 0|Offline
S
Points 249 [Total 249]| Ratings 1| Comments 239| Invitations 0|Offline
S
Points 185 [Total 185]| Ratings 1| Comments 175| Invitations 0|Offline
S
1
L
L
Points 83 [Total 8463]| Ratings 0| Comments 83| Invitations 0|Offline
S
Points 65 [Total 65]| Ratings 0| Comments 65| Invitations 0|Offline
S
Points 50 [Total 50]| Ratings 3| Comments 20| Invitations 0|Offline
S
Points 41 [Total 41]| Ratings 2| Comments 21| Invitations 0|Offline
S
Points 13 [Total 108]| Ratings 1| Comments 3| Invitations 0|Offline
Home | Contact | Blog | About | Terms | Privacy | Social | ©2015 Purple Inc.