This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Describe the transition from short-run to long-run equilibrium in a monopolistically competitive ... (Read 53 times)

cool

  • Hero Member
  • *****
  • Posts: 570
on: Jul 1, 2018
Describe the transition from short-run to long-run equilibrium in a monopolistically competitive industry.
 
  What will be an ideal response?

Question 2

Explain why the intersection of the best-response functions is the Cournot equilibrium.
 
  What will be an ideal response?


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

Carissamariew

  • Sr. Member
  • ****
  • Posts: 359
Reply #1 on: Jul 1, 2018
Answer to Question 1

In the short run, firms in a monopolistically competitive industry may make a positive profit. However, since there are assumed to be no significant barriers to entry, positive profits attract entry. As more firms (or varieties) enter, the demand for each firm (or variety) decreases, and thus prices and profits fall until there is no further incentive for entry.

Answer to Question 2

On a best-response function, a firm selects the profit-maximizing level of output given the level of output it believes the other firm will produce. At the intersection of the best-response functions, what one firm believes the other firm will produce actually is the amount the other firm produces. Thus, neither firm has an incentive to change the level of output.


cool

  • Member
  • Posts: 570
Reply 2 on: Jul 1, 2018
Wow, this really help

hollysheppard095

  • Member
  • Posts: 339
Reply 3 on: Yesterday
Excellent

« previous next »
 

Did you know?

Approximately 70% of expectant mothers report experiencing some symptoms of morning sickness during the first trimester of pregnancy.

Did you know?

Elderly adults are living longer, and causes of death are shifting. At the same time, autopsy rates are at or near their lowest in history.

Did you know?

Hip fractures are the most serious consequences of osteoporosis. The incidence of hip fractures increases with each decade among patients in their 60s to patients in their 90s for both women and men of all populations. Men and women older than 80 years of age show the highest incidence of hip fractures.

Did you know?

As of mid-2016, 18.2 million people were receiving advanced retroviral therapy (ART) worldwide. This represents between 43–50% of the 34–39.8 million people living with HIV.

Did you know?

Immunoglobulin injections may give short-term protection against, or reduce severity of certain diseases. They help people who have an inherited problem making their own antibodies, or those who are having certain types of cancer treatments.

Testing the effects of long-term fertilizing on inter-actions between mycorrhizal fungi and plants o Testing the effects of long-term fertilizing on inter-actions between mycorrhizal fungi and plants o
Children with Down syndrome have a small head, short, thick neck, flattened face, and a distinctive ... Children with Down syndrome have a small head, short, thick neck, flattened face, and a distinctive ...
Othmer’s Equilibrium Still Schematic Diagram Othmer’s Equilibrium Still Schematic Diagram
Long-range forecasts Long-range forecasts
How long does it take for 90% of a sample of strontium-90 (half-life of 28.8 years) to decay? How long does it take for 90% of a sample of strontium-90 (half-life of 28.8 years) to decay?
Uncover the back down to the waist. Stand at the head to apply lubricant to the back using long ... Uncover the back down to the waist. Stand at the head to apply lubricant to the back using long ...
Video: Studying the Left and Right Brain Independently

For a complete list of videos, visit our video library