MonopolisticMarkets_SmritiKuikel_18751_sectionC.docx - KATHMANDU UNIVERSITY SCHOOL OF MANAGEMENT Balkumari Lalitpur Microeconomics Term Paper on

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KATHMANDU UNIVERSITY SCHOOL OF MANAGEMENT Balkumari, Lalitpur Microeconomics Term Paper on: Comparison of Different Monopolistic Markets in the Context of Nepal Submitted to: Submitted by: Mr. Binayak Chhetri Smriti Kuikel Faculty of Microeconomics Roll No: 18751 Section: C BBA Hons: Semester I , Year I Date: December 21, 2018
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Table of Contents Acknowledgement Introduction to Monopolistic Competition Monopolistic Markets in Nepal 1. Restaurants 2. Furniture stores Analysis and Conclusion References
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Acknowledgement Preparing a report on any subject is a challenging work for anyone. This term paper has been duly prepared to meet the requirement of BBA program of Kathmandu University. Being the student of BBA, I am so pleased and proud to present this report. I would like to express my sincere gratitude towards Mr. Binayak Chettri, faculty of Microeconomics in Kathmandu University School of Management, for providing us with an opportunity to enhance our practical knowledge on economics. This work wouldn’t have been possible without his guidelines. Also, I would like to thank Mr. Sanjay Sharma, owner of Sharma Furniture, for sharing his thoughts, views and trend of the industry. Similarly, I would also like to express my sincere thanks to Mr. Santosh Karki, owner of Lahara Foodland, for sharing his experience with the industry.
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Introduction to Monopolistic Competition In economics, there are five major market systems: perfect competition, monopoly, oligopoly, monopolistic competition and monopsony. In general, perfect competition is market system which is mainly characterized by huge number of buyers and sellers. Monopoly is a form of market system where there is only one producer of a particular good. Oligopoly is where there are group of producers that make a dominant majority in the production. Moreover, monopsony is where there is only one buyer of a particular good or service. The concept of Monopolistic competition was introduced by E.H. Chamberlin in 1933. Monopolistic competition is a type of market system which combines characteristics of both the monopoly and perfect competition. There are huge numbers of producers or suppliers in the market. However, the products are sufficiently differentiated from one another so that the producers can charge their own price. Additionally, monopolistic markets have few barriers to entry and exit. Fig (ii): monopolistic competition in the short run Source: %20packs/microeconomics/page_123.htm
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Fig (i): monopolistic competition in the long run Source: As we can see in the fig (i), profit is maximized where MC= MR. The firm earns the abnormal profit shown in the shaded area, in the short run. However, in
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