Here is a first draft of the study guide. I have not included anything from the last two chapters. I will add that over the weekend. Show
FIRMS IN COMPETITIVE MARKETS You should understand:
KEY POINTS:
I. What Is a Competitive Market?
D. The Firm’s Long-Run Decision to Exit or Enter a Market
Monopoly KEY POINTS:
Be sure you know what a monopoly is and why they can remain a monopoly. What are the barriers to entry and what are some real-world examples? What is a natural monopoly? Be able to compare the monopoly situation to perfect competition: price, demand, marginal cost, marginal revenue, welfare, and etc. How should we regulate monopolies? Know the graphs! What is the main difference between a competitive firm and a monopoly?In a monopolistic market, there is only one firm that dictates the price and supply levels of goods and services, and that firm has total market control. In contrast to a monopolistic market, a perfectly competitive market is composed of many firms, where no one firm has market control.
How does the profit maximizing rule differ between a perfectly competitive firm and a monopolist?The key difference with a perfectly competitive firm is that in the case of perfect competition, marginal revenue is equal to price (MR = P), while for a monopolist, marginal revenue is not equal to the price, because changes in quantity of output affect the price.
What is the major difference between perfect competition and monopolistic competition?In perfect competition, firms produce identical goods, while in monopolistic competition, firms produce slightly different goods.
What is the main difference between a monopoly and monopolistic competition quizlet?What is the main difference between a monopoly and monopolistic competition? Monopolistic competition is characterized by an industry with many firms, differentiated products and easy entry and exit, while monopoly is a single firm with high barriers to entry.
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