Flashcards
Monopolistic Competition VS Oligopoly
Flashcards do conjunto (14)
- 1What is the degree of BTE for Monopolistic Competition?Low BTEs
- New firms have the freedom to enter/leave industry - 2What is the degree of BTE for Oligopoly?Significant BTEs
1. Natural
-Substantial internal EOS
- Control of raw materials
- Imperfect info
2. Financial
3. Artificially created
- Legal
- Aggressive tactics
- Trade - 3How many number of firms are there in a Monopolistic Competition?Large number of firms
- Each firm only producing an insignificant part of the total market
- Independent behaviour - 4How many number of firms are there in an Oligopoly?A few large firms
- Controls significant portion of total output
- High concentration ratio
- Strong price-setting abilities - 5What type of product differentiation is in a Monopolistic Competition?Close but identical substitutes
- Price elastic
- Differentiated (real & perceived)
- Price-setter - 6What type of product differentiation is in an Oligopoly?May be
1. Homogenous; have higher tendency to exhibit price rigidity to collude
2. Differentiated; find themselves competing aggressively using non-price strategies - 7What is the degree of knowledge in a Monopolistic Competition?Imperfect knowledge
- b/w firms; not fully aware of consumers' taste & preference
- b/w consumers; not fully aware of nature of products sold by diff. firms - 8What is the degree of knowledge in an Oligopoly?Imperfect knowledge
- Not enough info about other firms' production techniques, marketing or pricing strategies
- Consumers also not perfectly informed about diff. prices charged
- Acts as a BTE too - 9What is the allocative efficiency in a Monopolistic Competition?Allocative inefficient (not severe)
- P>MC
- Since a good's price in MC always exceeds MC, market can never be allocative efficient - 10What is the allocative efficiency in an Oligopoly?Allocative inefficient (more severe)
- Set price above MC - 11What is the dynamic efficiency in a Monopolistic Competition?Partially dynamic efficient
- Some innovation & product variety
- Since key feature of this market is product differentiation, therefore more innovation & product variety - 12What is the dynamic efficiency in an Oligopoly?Very dynamic efficient
- Can use part of their supernormal profits to invest in research & development, resulting in innovation - 13Is there equity in a Monopolistic Competition?Equitable due to long-run normal profit
- No sustained redistribution of income b/w firms and consumers - 14Is there equity in an Oligopoly?Inequity due to long-run supernormal profit
- Profits earned due to firms ^ prices at expense of consumers
-A large share of wealth redistributed from consumers to producers
Informações
- Descrição
- A Levels Economics FlashCards sobre Monopolistic Competition VS Oligopoly, criado por Tammy Sim em 24-08-2015.
- Criado por
- Tammy Sim
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