Econ HW Ch. 11

However it will not make a profit because while the

Info icon This preview shows page 1. Sign up to view the full content.

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

Unformatted text preview: rice without losing customers, thereby maximizing their profits. With success in nonprice competition, the firm can make more of its products and ultimately make more of a profit. #5. a. A monopolistic competitor’s long- run equilibrium output is such that price exceeds the minimum average total cost (implying that consumers do not get the product at the lowest price attainable) and price exceeds marginal cost (indicating that resources are underallocated to the product). Therefore, in the long run monopolistic competition makes normal profit. The first part is true under this but the second part is not. The monopolistic competitor is making no economic profits because it is offering product variety; it’s just that it is not maximizing its efficiency. b. In the long run, a monopolistic competitor’s goal is to match minimum ATC to its price in order to produce economic efficiency. However, it will not make a profit because while the good is produced in the least costly way, it is exactly sufficient to cover average total cost. #6. Oligopolies exist because it is basically everything else that is not encompassed by pure competition, monopolistic competition, or pure monopoly. It is a market dominated by a few large producers of a homogeneous or differentiated product. The US. Aluminum industry, “Big Four” business firms, steel industry, automobile industry, farm implement producers, and household appliance manufacturers are all examples of oligopolies. It is different from monopolistic competition in that it...
View Full 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