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Softa [21]
3 years ago
15

Explain the difference between the demand curve faced by a perfectly competitive firm and the demand curve faced by a monopoly.

Draw both curves and explain why they are different. How do these demand curves cause marginal revenue to differ across the two types of firm?

Business
1 answer:
Natalka [10]3 years ago
6 0

Answer:

Perfectly competitive firm: demand curve is a line parallel to the horizontal axis (perfectly elastic demand)

Monopoly: demand curve is a downward sloping line (lower price higher quantity demanded)

Marginal revenue for perfectly competitive firm is constant, marginal revenue for monopoly is decreasing

Explanation:

A perfectly competitive firm is a price-taker. It is a tiny player that cannot influence price whether it produces lower or higher quantity. Therefore its revenue increase the same amount (charge the same given price) for every additional unit => constant marginal revenue.

A monopoly is the only firm in its market, its demand curve is the aggregate demand curve, which is downward sloping. For every additional unit it has to charge a lower price (for the added unit and all previous unit) to sell => decreasing margnial revenue.

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Hence from the above we can conclude that the correct option is D.

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Explanation:

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3 years ago
Should Japanese companies such as Nintendo and Toyota with business in Mexico have hedged against adverse changes in the peso/ye
svetoff [14.1K]

<u>Solution and Explanation:</u>

These companies with the businesses in Mexico are not affected due to the adverse exchange rates and have nullified it, because they have their operations in the neighboring nations such as Canada and USA. Here, These companies do not use Yen as a currency for the exchange and since Mexico has NAFTA agreement with the USA and Canada, then these companies take the benefits of the duty free trade. Hence, a superior quality, scale of production and savings in duty and tariff, will make them get better off and nullify the impact of the exchange rate.

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4 years ago
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Blababa [14]

Answer:

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