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Economics Model Answers Nine - 2013 (view source)

Revision as of 22:51, May 14, 2013

530 bytes added ,  22:51, May 14, 2013
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:Explained by a student (CM):  It is Monopolistic Competition because the hair dresser offers a differentiated product that is not a perfect substitute. 2. It is Perfect Competition because the prices are driven very low because there are probably a lot of substitutes and rival firms. 3. It is a Monopoly because the prices are able to increase substantially due to the lack of perfect substitutes and rival firms.
 
:Explained by a student (CM):  It is Monopolistic Competition because the hair dresser offers a differentiated product that is not a perfect substitute. 2. It is Perfect Competition because the prices are driven very low because there are probably a lot of substitutes and rival firms. 3. It is a Monopoly because the prices are able to increase substantially due to the lack of perfect substitutes and rival firms.
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:Explained by another student (NL):  Statement 1 likely refers to a state of monopolistic competition, since, although there are other hair stylists to provide competition, her product is preferable and can raise prices without losing customers. Statement 2 probably speaks of a state of perfect competition, since the firm is forced (by competition) to keep his prices very low. Statement 3 is referring to a monopoly, since he is the only supplier in the town and is able to hold his prices very high without losing customers.
    
4. List how monopolies can be established.
 
4. List how monopolies can be established.
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