Monopolistic Competition

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12 жыл бұрын

Having now studied perfect competition and Pure Monopoly, we will now step back towards the competitive end of the spectrum of market structures and examine monopolistic competition. A monopolistically competitive market is one with many small firms each selling differentiated products. The entry barriers are low, but firms do have some price making power. Since each firm's output is slightly different from each other firm's, the individual sellers will face a downward sloping demand curve, much like a monopolist. But since entry barriers are low, the chance of an individual firm earning economic profits in the long-run is small.
This lesson will introduce the characteristics of monopolistic competition and provide a detailed graphical analysis of an individual firm in a monopolistically competitive market. We will look at the market for restaurants, which shows may of the characteristics of the market structure.
In the end we will determine whether monopolistically competitive markets are efficient by examining the firm's average total cost and its marginal cost compared to the price in the long-run equilibrium.
Want to learn more about economics, or just be ready for an upcoming quiz, test or end of year exam? Jason Welker is available for tutoring, IB internal assessment and extended essay support, and other services to support economics students and teachers. Learn more here! econclassroom.com/?page_id=5870

Пікірлер: 121

@whoagloria 11 жыл бұрын

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@MsAlimajeed 10 жыл бұрын

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@koyoali65 4 жыл бұрын

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@VicSMeIsTeR 5 жыл бұрын

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@XxGeminiAngelx 10 жыл бұрын

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@acsas5973 3 жыл бұрын

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@AcidicLyricz 11 жыл бұрын

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@MegaDillpill 7 жыл бұрын

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@damithSL 11 жыл бұрын

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@mthlaxer 10 жыл бұрын

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@joytie7009 4 жыл бұрын

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@cyanabernathy3446 7 жыл бұрын

extremely helpful, easier to comprehend now. Thanks :D

@lakhamameir7885 7 жыл бұрын

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@FutureAttorney80 8 жыл бұрын

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@exlc16 9 жыл бұрын

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@xXAmoureXx 10 жыл бұрын

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@ermiaikenjr7457 3 жыл бұрын

I'm having my mocks in a few days lol. Thank you for the explanations

@yugendranmurugiah7705 9 жыл бұрын

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@franceszhang1999 8 жыл бұрын

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@thelstan8562 8 жыл бұрын

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@Thebennageserric 2 жыл бұрын

Very insightful. thank you!

@josiahzhou6382 9 жыл бұрын

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@shuyuzhong7692 8 жыл бұрын

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@nanciesta8678 3 жыл бұрын

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@zippylopp7314 10 жыл бұрын

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@miamu7593 6 жыл бұрын

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@smshahriar997 7 жыл бұрын

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@ayahassanfadl7898 11 жыл бұрын

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@harshbhushan7094 3 жыл бұрын

I would just like to say- Thank you sir

@yaoifangirlful 7 жыл бұрын

Very helpful: it was descriptive, audible, and to the point. Thanks

@sujayshegde 11 жыл бұрын

Excellent teaching sir. Thank U .

@shikebhashimi6430 7 жыл бұрын

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@jaypalsharma3011 8 жыл бұрын

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@JoshTizza1 10 жыл бұрын

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@javeedmohammadvlogs2124 8 жыл бұрын

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@bsr1068 8 жыл бұрын

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@camille_vrd Жыл бұрын

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@gadz8843 10 жыл бұрын

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@kip99283 6 жыл бұрын

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@aakashpatel2755 7 жыл бұрын

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@nancybutola5473 3 жыл бұрын

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@yuanchi9662 8 жыл бұрын

THANK YOU!

@mandlangobeni2185 11 жыл бұрын

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@chedbeckford8067 11 жыл бұрын

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@smiilee2001 4 жыл бұрын

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@shramayen9512 6 жыл бұрын

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@SaCrunch 8 жыл бұрын

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@musicluver95100 8 жыл бұрын

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@lifewithlana4604 9 жыл бұрын

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@gabriella5425 6 жыл бұрын

thank you!!!!!

@momohuntshar 9 жыл бұрын

good explaining (: better than my teacher

@bobbydelorisconrad3733 6 жыл бұрын

Thank you...

@spikirifx7060 8 жыл бұрын

thats awesome

@Love-Thyself. 10 жыл бұрын

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@alyssawong8750 9 жыл бұрын

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@AshokSingh-mm5lw 10 жыл бұрын

Excellent

@lucasmatarazzo6428 10 жыл бұрын

An increase in supply will then cause a decrease on demand. This is because the restaurants are substitutes to each other.

@ashleytisdoll 8 жыл бұрын

Thankyou !

@alexandroadoe5398 8 жыл бұрын

Thanks a lot

@Ecoinspire2023 7 жыл бұрын

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@zephyrus057 11 жыл бұрын

thank you

@nkingp23 11 жыл бұрын

When it comes on the market it is the only mex restaurant, and it works on monopolistic principle, but when other restaurants start producing mexican food, the demand for our particular restaurant has fallen. This graph describes the demand for our mex.r. But on the whole food market it increases supply of food. but this isn't what this graph represents

@apekshakumar5878 7 жыл бұрын

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@Havanawoodscigars 10 жыл бұрын

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@subinraj100 9 жыл бұрын

Thanks

@directto05 11 жыл бұрын

hmm, doesnt the entry of new mexican restaurant causes like increase of supply rather than decrease of demand? please i need your answer to this. thanks.

@stan5250 7 жыл бұрын

Merci Vielmal

@MsBash99 10 жыл бұрын

sir is it wrong to take MR on y axis rather thn price?..what is the point in taking price when u r comparing MR to output...for eg in demnd curve v take price n qty in y n x axis respctvly..which makes sense as there exit a indirect relationship btwn the two.

@odanetaylor-hue5836 6 жыл бұрын

what about efficiency in the short run?

@mellyp6969 11 жыл бұрын

but what if the firm continuously differentiates its products, would it avoid the flattening of its demand curve?

@sjarimartokusumo8083 9 жыл бұрын

Thanks... it's really helpful

@NeverGetThisBOOMm 11 жыл бұрын

What is the intro song?

@daoujadd9141 5 жыл бұрын

but could the initial Mexican restaurant find a way to gain profit by re-monopolizing itself? IE: innovating it's product?

@monicarutanhira8896 7 жыл бұрын

life saver.....

@chaneljonker773 9 жыл бұрын

thank you this will help me ace my test :)

@mateocardoner8608 10 жыл бұрын

oh la!

@bananian 11 жыл бұрын

what's accounting profits?

@mtvrdeich 10 жыл бұрын

i get everything, just not the reason why mr is below demand? and also why in perfectly competitive markets does P=MR=D, and here theres two different lines for it, when in perfect competition there was only one line

@kenleykerr1158 10 жыл бұрын

p=mr=d reason- this is because of the horizontal demand curve. im a perfect competitive market, the price is set where supply meets demand which is the equilibrium. therefore the demand curve is going to stretch across from price through the equilibrium horizontally. firms produce where price = marginal revenue

@JeremyCouitinho 8 жыл бұрын

whats that song in the begining

@JeremyCouitinho 8 жыл бұрын

+Juan ignacio Bontá thanks :)

@zainfarooqzainfarooq 11 жыл бұрын

why would there be no profits in the long run? :s

@hhhsks 9 жыл бұрын

What do you mean when you say that there will not be 'economic' profits? Does that mean super-normal profit?

@vedantsood3848 9 жыл бұрын

Yeah, profits above and beyond normal cost. economic and supernormal profits are the same.

@hhhsks 9 жыл бұрын

Thanks :)

@saifkhashoggi3481 6 жыл бұрын

we get it enta cash ya zurich

@sarasaeed1213 5 жыл бұрын

ياريت لو كان مترجم

@mannyelizondo6721 10 жыл бұрын

Is econ a good major?

@benzola4808 10 жыл бұрын

I don't know, bro.

@alieumboge7946 9 жыл бұрын

Yes bro.

@Superballer45able 10 жыл бұрын

Does the demand curve shift left or simply change slope?

@joshbird5204 5 жыл бұрын

Changes slope due to consumers having more choice of products since there are more firms in the market in the long run

@bananian 11 жыл бұрын

so why do ppl open restaurants if no profits can be made in longrun?

@gollavillihari2516 4 жыл бұрын

Because firms have no incentive to exit or to stay. Zero economic profit does not mean zero accountant profit.so firms continue to run.

@komalzehra7524 8 жыл бұрын

why demand curve is above then Marginal revenue??

@mahadiarian9093 4 жыл бұрын

because marginal revenue will decrease as demand decrease but at a faster rate

@bananian 11 жыл бұрын

the video said so.

@TrangHoang-nk7we 8 жыл бұрын

Can you guys explain to me in a logical way: " Why does MC=MR in perfectly competitive market mean maximizing profit?" and " Why does P > MR = MC in monopolistically competitive market?". Thank you so much!

@janetwilkinson5404 8 жыл бұрын

MR=MC in perfect competition because that is the max point at which buyers are willing to pay. Firms in the perfect competition are price takers meaning they get there price from the market if a firm charges above the market price no one will be willing to buy the product and they will just go to another firm who is selling the same product as you.

@janetwilkinson5404 8 жыл бұрын

Thus meaning there would be no reason for a firm to sell below mc=mr because consumers will buy just as much at the market price.

@janetwilkinson5404 8 жыл бұрын

And P>MC because in monopolistic competition firm charge different prices for the same product depending on what category the firms puts you under this means the firm will make more than mr=mc because the items being sold are not easily resold so the consumer doesn't have much choice but to buy it from the company. An example would be airline tickets because business people are willing to pay more because they book flights last minute and dont mind paying extra to get on the next available plane asap.

@janetwilkinson5404 8 жыл бұрын

Also it is hard to resell airline tickets because they have the persons name on them and requires id when using the ticket that is why the consumer must buy ticket directly from company and the company can charge what ever they like because there are less options

@TrangHoang-nk7we 8 жыл бұрын

thank you!!!!