Why are demand curves for perfectly competitive firms horizontal and for firms in monopolistic competition downward sloping?
Answer to relevant QuestionsCan you think of markets in which there is absolutely no product differentiation? If you owned a firm in such a market, what would your demand curve look like? What would the demand curve for the market look like? Why are economies of scale central to the argument that monopolies may end up producing more and charging less than perfectly competitive firms? Suppose you were managing a firm in unbal anced oligopoly and your market share was less than 5 percent. Describe how your price and output levels would be determined. Explain what is meant by a kinked demand curve. Why is it kinked? Suppose you read the 2004 Census of Manu factures in Canada and noted four-firm concen tration ratios and Herfindahl-Hirschman indexes for the following oligopolistic industries: Which one represents the most unbalanced oli ...
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