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Chapter 10- Microeconomics
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- 1What is monopolistic competition?The market structure where many producers of somewhat different products compete with one another.
- 2What are three basic characteristics of monopolistic competition?Product differentiation, many sellers and free entry.
- 3How is short run equilibrium determined?When the equilibrium price is greater than average total costs at the equilibrium output. When equilibrium price is below average total cost at the equilibrium output, the firm is minimizing its economic losses.
- 4How is long-run equilibrium determined?Equilibrium price=average total costs.
- 5What are the differences and similarities between monopolistic competition and perfect competition?Both--> may earn short-run economic profits
- 6What are the real costs of monopolistic competition?The inefficiencies are a by product of product differentiation and must be weight against the social benefits of increased product variety.
- 7Are the differences between monopolistic competition and perfect competition exaggerated?it varies directly with the strength of product differentiation.
- 8Why do firms advertise?A firm hopes it can alter the elasticity of the demand for its product, making it more inelastic and causing an increase in demand will enhance profits.
- 9Is advertising good or bad from a society's perspective?Advertising has been manipulating consumer tastes and creates "needs" for trivial products. but it may lead to more competitive markets and lower consumer prices.
- 10What is games theory?Stresses the tendency of various parties to minimize damage from opponents. A firm may try to figure out its competitors most likely countermoves to its own policies and then formulate alternative defence measures.
- 11What are cooperative and noncooperative games?Cooperative-->can talk and set binding contracts
Noncooperative--> assumed to act independantly - 12What are network externalities?Positive network externality occurs when a consumer's quantity demanded increases because a greater number of consumers purchase the same good. (Vice versa)
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- University Microeconomics Fichas sobre Chapter 10- Microeconomics, creado por mesangster el 15/03/2015.
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