Review_Ch12-16 (1)

Review_Ch12-16 (1) - Econ 251 Fall 2009 12/5/09 Cristea...

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Econ 251 Fall 2009 12/5/09 Cristea Review Chapters 12-16 CHAPTER 12 – MO&OPOLISTIC COMPETITIO& What are the characteristics of monopolistic competition? s How many sellers? - What is the market share of each firm? - Do they need to consider other firm’s decisions? - Can they collude, i.e. conspire to fix prices? s What types of products do firms sell? - What is product differentiation? s What do firms compete on? - Quality - Price - Marketing s Is entry/exit possible? Are there barriers to entry? - Are there profits in the short run? In the long run? What decisions do monopolistic competitors make? Can firms decide price? Output? How does the demand curve faced by a firm look like? How does it compare with perfect competition? What is the short run output decision? - Need to know how to draw the graph for the short run equilibrium - How does the number of firms adjust if short run profit is not exactly zero? What is the long run output decision? - Need to know how to draw the graph for the short run equilibrium Compare monopolistic competition to perfect competition: - What is excess capacity? - What is markup? Is monopolistic competition efficient? Is there overproduction or underproduction? How can monopolistic competitors maintain their profits? s Innovation => product development s Advertising - Need to understand graph with advertising costs Can advertising be an efficient activity?
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Econ 251 Fall 2009 12/5/09 Cristea CHAPTER 13 – OLIGOPOLY Oligopoly What is an oligopoly – characteristics? 1. Small number of firms 2. Natural or legal barriers to entry What is a duopoly? What does the small number of firms imply for the behavior of firms? s Interdependence s Temptation to cooperate (cartels) - What is a cartel? Traditional approaches What is the assumption of the kinked demand curve model? What does this assumption imply about the demand curve? How does the marginal revenue look like? What is a dominant firm oligopoly?
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This note was uploaded on 10/04/2011 for the course ECONOMICS 251 taught by Professor Kelly during the Spring '11 term at Purdue.

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Review_Ch12-16 (1) - Econ 251 Fall 2009 12/5/09 Cristea...

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