So this is going to be my spectrum right over here. Others argue that product differentiation satisfies consumer’s desires for variety and breadth of choice if pure competition prevails everywhere, homogeneity of products would mean lower costs. Instructor In this video, we're going to dig a little bit into the idea of what it means to be a monopoly, and so to help us appreciate that, let's think about the spectrum on which firms can be. Some economists think that the wastes due to monopolistic competition are, in-fact, small. p MC ( MR) 0 (economic profits, not accounting) p minimum AC. Much controversy and honest doubt surrounded these issues. In general then, for a natural monopoly, AC is said to decrease (as Q increases) through some relevant range of market output. Thus, he said, “I am happy to leave this argument to the sociologists.” 3. Boulding has doubted upon the significance of this value also. On the sociological side, it might be argued that advertising has itself an entertainment and cultural value, and that it promotes mass communication in the form of cheaper magazines, news papers, radio and television. On the other hand, under monopoly the firm has to spend a small amount on selling costs. Under monopolistic competition, the firm has to spend more on selling costs. Under monopoly and monopolistic competition, a firm cannot determine both price and output at the same time. 14 represents AR and MR under monopolistic competition. It means small fall in price, will lead to big increase in demand. Under monopolistic competition also, the revenue curves are different but in this case, the revenue curves are more elastic. For example, if a single firm produced all the. As shown from the diagram, the firm within a monopoly market structure operates at the profit maximization point, where marginal revenue is equal to. It means revenue curves are less elastic. Bilateral monopoly is a market consisting of a single seller (monopolist) and a single buyer (monopsonist). It means for a small increase in sales (demand), the monopolist has to reduce the price to greater extent. AR refers to price, MR refers to marginal revenue. But under monopolistic competition, there is imperfect knowledge on the part of buyers and sellers. Under monopoly, we assume that the sellers and buyers have complete knowledge regarding market activities.
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