Managerial Economics

2909 Words Jul 13th, 2015 12 Pages
SEMESTER 2014
MANAGERIAL ECONOMICS – BMME5103
ASSIGNMENT (60%)

Name: NGUYỄN THỊ MINH HIỀN

Class: MBAOUM0514-K14A

Question 1
a. What is (are) the main difference(s) between a monopolistically competitive market and a monopoly market?
Their characteristics are different:
|Monopolistically competitive market |Monopoly market |
|Large number of small firms: |A single firm selling all output in a market: |
|It is relatively small compared to the overall size of the market. |It is a market controlled by a single seller. |
|All firms are relatively
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|sellers so that they do not inadvertently charge less than the going | |
|market price. | |
| |A monopoly firm might know something or have a piece of information |
|Extensive knowledge also applies to technology and production |that is not available to others. This "something" may or may not be |
|techniques. Every monopolistically competitive firm has access to |patented or copyrighted. It could be a secret recipe or formula. |
|essentially the same production technology. Some firms might have a |Perhaps it is a unique method of production. |
|few special production tricks (a way to slice lettuce, a secret | |
|recipe, etc.), but these differences are not major. | |

b. Explain how the presence of product differentiation influences the way in which firms in a monopolistically competitive market set their prices, as compared to firms operating in a perfectly competitive market.
In the

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