Marketing Review Test 3
Chapter 10 part 1 Products I
What are a product, product line, and product mix?
Product: a good, service, or idea consisting of a bundle of tangible and intangible
attributes that satisfies consumers needs and is received in excha
Monopsony and Monopoly:
Besides being a monopsonist if the producer happens to be a monopolist in the product
market as well then his surplus will be further enlarged.
In Figure 56, we find that the producer enjoys monopoly power in both markets.
Monopsony and Competition:
A producer has monopsony power only in the labor market.
In the product market he faces competition with other firms.
In Figure 55 we notice such a situation.
In a competitive commodity market the demand curve of the producer is
Monopoly in the product market is a condition where only one producer or seller
Similarly when only one employer is buying labor he enjoys monopsony power in the
The workers have no option but to work with the monopsonis
Monopoly Supply Curve:
The behavior of the monopoly demand curve is distinct from the demand curve under
The supply curve of a monopolist is similar to that of a competitive firm.
Supply is governed by the technical conditions of production.
Monopoly profits differ in two respects:
i) Monopoly profits are permanent and enjoyed in the short as well as long run.
There is no fear of monopoly profits being competed away.
ii) Monopoly profits arise out of control over conditions in the market.
In order to study equilibrium under monopoly let us draw the demand and supply or cost
curves of a monopolist.
In Figure 42 AR and MR are the demand and marginal revenue curves of a monopolist.
AC and MC are the respective cost or su
Microeconomics is a static approach in the sense it concentrates on individual
behavior in a very short period of time.
It analyzes instant changes in behavior.
It avoids taking account of long term and external effects on such behavior.