share. Few firms dominate Although only a few firms dominate‚ it is possible that many small firms may also operate in the market e.g. the major airlines. It is a situation between perfect competition and monopoly. When there are only two firms in the market the situation is known as duopoly Example (hypothetical): a market has the below players; A-56‚ B-43‚ C-22‚ D-12‚ E-3 & F-1 The three firms dominate this market with a concentration ratio of 88.3% i.e. 121/137 X100% Oligopoly may exist due to
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University of California‚ Davis Department of Agricultural and Resource Economics ARE 100B Dr. Larson Winter 2010 Problem Set 3 Answers 1. Intel is a monopolist manufacturing computer chips with a competitive fringe of firms that act as price takers of the price Intel sets. The market willingness to pay for the P80 chip is given by= 400 − Q‚ with p in dollars p F per chip and Q in thousands of chips per month. The fringe marginal cost curve is MC= 40 + .5Q F (with Q F and MC F also
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there was no differentiation‚ the competition would turn into perfect competition. In effect‚ monopolistic competition is something of a hybrid between perfect competition and monopoly. Comparable to perfect competition‚ monopolistic competition contains a large number of extremely competitive firms. However‚ comparable to monopoly‚ each firm has market control and faces a negatively-sloped demand curve. Monopolistic competition as a market structure was first identified in the 1930s by American economist
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associated with producing in the two plants are MC1 = 3Q1 and MC2 = 2Q2. What price should be charged in order to maximize revenues? A. $39 B. $47 C. $52 D. $56 4. Which of the following is true under monopoly? A. Profits are always positive. B. P > MC. C. P = MR. D. All of the choices are true for monopoly. 5. You are the manager of a firm that sells its product in a competitive market at a price of $50. Your firm’s cost function is C = 40 + 5Q2. The profit-maximizing output for your firm is: A. 4/5
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MARKS) 1.EXPLAIN MONOPOLY MARKET WITH PRICING STRUCTURE MONOPOLY Monopoly is the least competitive market structure of all. A pure monopoly is a market with only one producer who produces 100% of the output. Consumers have the least choice in a monopoly market – buy from the monopolist or don’t buy. A monopoly market will have the highest price and the lowest total production of any market structure. The assumptions of monopoly are: One seller: The classic monopoly has only one seller
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Q.No 1- Inflation is a global Phenomenon which is associated with high price causes decline in the value for money. It exists when the amount of money in the country is in excess of the physical volume of goods and services. Explain the reasons for this monetary phenomenon. Inflation is commonly understood as a situation of substantial and rapid increase in the level of prices and consequent deterioration in the value of money over period of time. It refers to the advantage rise in the general
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Two main vulnerabilities of the diamond industry: price of diamond linked to supply and value diamond linked to belief that they are rare and therefore special‚ and thus suitable token of sentiment. DeBeers exercised monopoly power by effectively controlling production and distribution of diamonds‚ thus controlling supply and ability to control pricing. When the market started to shift as other sources of diamonds were discovered‚ DeBeers still held an advantaged position as they had sole control
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There are various types of market structures but the most important of all is the oligopolistic market structure. An oligopoly is when a market is dominated by relatively few large firms. An example of an oligopolistic market structure is commercial banking and the newspaper industry. One of the other market structures is Perfect Competition (PC). The way that firms in perfect competition set the price of their products is through the MC=MR condition for profit maximization and at the same time
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done by several regional firms in the US‚ each operating as a pure monopoly. 2. Explain and graphically illustrate how the electrical monopolist would determine its profit maximizing price and output level. * Identify the area of consumer and producer surplus for the profit maximizing monopoly. * Identify the deadweight loss for the monopolist. 1. Now assume the federal government imposes a regulation on the monopoly. 2. Show and explain how the electrical monopolist would determine
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MB0042 MANAGERIAL ECONOMICS Q. Inflation is a global Phenomenon which is associated with high price causes decline in the value for money. It exists when the amount of money in the country is in excess of the physical volume of goods and services. Explain the reasons for this monetary phenomenon 1. Define Inflation 2. Causes for Inflation ANS: (1) Inflation is a situation of substantial and rapid increase in the level of prices and consequent deterioration in the value of money over a period of
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