Monopolistic Competition Essay Example | Topics and Well Written Essays - 1000 words

Monopolistic Competition - Essay ExampleFigure 1 is illustrative for differentiating market twist and the chapters refer to the chapters in Mankiw (2007). Figure 1. Gregory Mankiw on four types of market structure Source Mankiw (2007, p. 341) Mankiw (2007, p. 341) elaborated that in that location is no magic number that would allow us to determine what is few or many quicks as reality is never as precise as possibleness. Samuelson and Nordhaus (2001, p. 168) had viewed monopolistic controversy as imperfect competition. Further, they described the type of competition to be very common (Samuelson and Nordhaus 2001, p. 187). Earlier, Hunt (2000, p. 41) reported that the theory of monopolistic competition was developed by Edward Chamberlin in 1933 in which the latter complained that his theory was wrongly lumped with Joan Robinsons theory of imperfect competition. In particular, Hunt (2000, p. ... In contrast, through product differentiation, a level in a monopolistic competition h as a portion of the market in which he has a monopoly. For instance, the pants intentness has Levis and Wrangler, for example, and each brand has a set of customers loyal to the brand. For their respective loyal customers, each firm is a monopoly facing a specific requisite curve. Varian (2005, p. 461) pointed out in a monopolistic competition, each firm faces a downward-sloping demand curve for its product. This is illustrated in Figure 2. Figure 2. Monopolistic Competition in the Short Run Source Mankiw 2007, p. 369 A diagram similar to Figure 2 of the earlier foliate is in Depken (2006, p. 199) as well as in Taylor (2007, p. 293). In Figure 2 of the earlier page, it is attract that a monopolistic competitive firm maximizes lucre where its marginal revenue equals marginal cost (Mankiw 2007, p. 369). However, as shown in Figure 2, this can lead to a loss or profit, depending on the costs curves confronting the firm (Mankiw 2007, p. 369). The left panel of Figure 2 in the immed iately preceding page indicates a profit for the monopolistic competitive firm while the one on the right panel of Figure 2 indicates a loss. Meanwhile, it must be pointed out that a untold earlier book, Eckert and Leftwich (1988, p. 212) had described a much more elastic demand curve for a monopolistic competition or a demand curve that is close to a horizontal straight line to reflect that demand can either significantly drop or increase with prices changes in a monopolistic competition. In other words, this meaning that the demand curve facing the competitively monopolistic firm in the short run is extremely elastic. Subject to