Tham khảo tài liệu 'câu hỏi đánh giá môn kinh tế vĩ mô bằng tiếng anh- chương 12', kinh tế - quản lý, kinh tế học phục vụ nhu cầu học tập, nghiên cứu và làm việc hiệu quả | Chapter 12 Monopolistic Competition and Oligopoly CHAPTER 12 MONOPOLISTIC COMPETITION AND OLIGOPOLY REVIEW QUESTIONS 1. What are the characteristics of a monopolistically competitive market What happens to the equilibrium price and quantity in such a market if one firm introduces a new improved product The two primary characteristics of a monopolistically competitive market are 1 that firms compete by selling differentiated products which are highly but not perfectly substitutable and 2 that there is free entry and exit from the market. When a new firm enters a monopolistically competitive market seeking positive profits the demand curve for each of the incumbent firms shifts inward thus reducing the price and quantity received by the incumbents. Thus the introduction of a new product by a firm will reduce the price received and quantity sold of existing products. 2. Why is the firm s demand curve flatter than the total market demand curve in monopolistic competition Suppose a monopolistically competitive firm is making a profit in the short run. What will happen to its demand curve in the long run The flatness or steepness of the firm s demand curve is a function of the elasticity of demand for the firm s product. The elasticity of the firm s demand curve is greater than the elasticity of market demand because it is easier for consumers to switch to another firm s highly substitutable product than to switch consumption to an entirely different product. Profit in the short run induces other firms to enter as firms enter the incumbent firm s demand and marginal revenue curves shift 191 Chapter 12 Monopolistic Competition and Oligopoly inward reducing the profit-maximizing quantity. Eventually profits fall to zero leaving no incentive for more firms to enter. 3. Some experts have argued that too many brands of breakfast cereal are on the market. Give an argument to support this view. Give an argument against it. Pro Too many brands of any single product signals .
