jagomart
digital resources
picture1_Competition Pdf 122278 | Ib Micro Monopolistic Competition


 188x       Filetype PDF       File size 1.48 MB       Source: s3-eu-west-1.amazonaws.com


File: Competition Pdf 122278 | Ib Micro Monopolistic Competition
monopolistic competition ib economics theory of the firm market structures basics of monopolistic competition monopolistic competition is a form of imperfect competitionand can be found in many real world markets ...

icon picture PDF Filetype PDF | Posted on 08 Oct 2022 | 3 years ago
Partial capture of text on file.
     Monopolistic	Competition
  IB	Economics:	Theory	of	the	Firm	&	Market	Structures
 Basics	of	Monopolistic	Competition
 • Monopolistic	competition	is	a	form	of	imperfect	
  competitionand	can	be	found	in	many	real	world	
  markets	ranging	from	sandwich	bars	and	coffee	stores	in	
  a	busy	town	centre	to	pizza	delivery	businesses	in	a	city	
  or	hairdressers	in	a	local	area.	
 • Care	homes	for	older	people	might	also	fit	into	the	
  market	structure	known	as	monopolistic	competition
 • Monopolistic	competition	is	similar	to	perfect	
  competition,	indeed	some	economists	regard	it	as	more	
  realistic,	because	the	products	are	differentiated
 • Product	differentiation	means	that	businesses	have	
  some	control	over	their	products,	it	implies	that	firms	
  have	some	price-setting	power,	AR	slopes	downwards
  Examples	of	Monopolistic	Competition
      Shoe	repairs	and	     Taxi	and	minibus	       Sandwich	bars	
         key	makers            companies          and	coffee	stores
         Hairdressing	      Dry-cleaners	and	         Bars	and	
            salons            launderettes           Nightclubs
 Assumptions:	Monopolistic	Competition
 1. There	are	many	producers	and	many	consumers	- the	
   industry	concentration	ratio	is	low	
 2. Consumers	are	aware	that	there	are	non-price	
   differences	among	products	i.e.	there	is	slight	product	
   differentiation	– non-price	competition	is	strong	and	
   plenty	of	consumer	switching	takes	place
 3. Producers	have	some	control	over	price	- they	are	
   “price	makers”	not	“price	takers”	but	the	price	
   elasticity	of	demand	is	higher	than	it	would	be	under	
   monopoly	(the	cross-price	elasticity	is	high)
 4. Barriers	to	entry	and	exit	are	low	– this	allows	
   producers	respond	to	changing	profit	signals	and	
   means	profits	are	competed	away	in	the	long	run
The words contained in this file might help you see if this file matches what you are looking for:

...Monopolistic competition ib economics theory of the firm market structures basics is a form imperfect competitionand can be found in many real world markets ranging from sandwich bars and coffee stores busy town centre to pizza delivery businesses city or hairdressers local area care homes for older people might also fit into structure known as similar perfect indeed some economists regard it more realistic because products are differentiated product differentiation means that have control over their implies firms price setting power ar slopes downwards examples shoe repairs taxi minibus key makers companies hairdressing dry cleaners salons launderettes nightclubs assumptions there producers consumers industry concentration ratio low aware non differences among i e slight strong plenty consumer switching takes place they not takers but elasticity demand higher than would under monopoly cross high barriers entry exit this allows respond changing profit signals profits competed away long...

no reviews yet
Please Login to review.