ch11 - Chapter 11 Imperfect competition Monopolistic...

Info icon This preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 11– Imperfect competition Monopolistic competition o Exercise 11.1: Monopolistic competition diagram Oligopoly Game theory Original prisoner’s dilemma Oligopoly game Sequential games HDTV research game Monopolistic competition Assumptions Each firm produces a differentiated product downward sloping firm demand & MR < P No entry barriers zero profits in LR & low concentration. No strategic interdependence firms ignore rival choices Results SR : Fixed n & downward sloping demand imply π > 0 or π < 0 (if P > AVC) and P > MC. LR : π = 0 & downward sloping demand imply… firm demand tangent to LRAC tangency occurs at downward sloping portion of LRAC P = LRAC, P > MC LRAC > MC LRAC not minimised which… is called the excess capacity result does NOT imply excess entry EC120 Chapter 11 – Imperfect competition page 1 of 9
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
because entry increases variety. EC120 Chapter 11 – Imperfect competition page 2 of 9
Image of page 2
Exercise 11.1: Monopolistic competition diagram Find SR profits, LR price & output. stment to long-run equilibrium ___________ profits induce _______ ___________ shifts demand curve ____ ___________ continues until … demand is _______________ and profits = _______ _________ profits induce ________ _________ shifts demand curve ____ _________ continues until … demand is _________________ and profits = _______ EC120 Chapter 11 – Imperfect competition page 3 of 9 q q MC $20 Short-run $60 $50
Image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern