Managerial Economics

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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…show more content…
| |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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