1. Combination of features from both perfect competition and monopoly; this compromise between monopoly and perfect competition takes the form of many firms producing differentiated and highly substitutable products – product differentiation could be in terms of packaging designs, colour, brand names, advertising claims, after sale service, all being competitive and highly persuasive. Examples of such market structures could be seen in the Edible oil industry where we have EAI producing Kimbo, Kapa Oil Refineries (Kasuku), Bidco (Chipsy)
2. Freedom of entry and exit.
3. Downward sloping demand curve – denoting presence of competition.
4. Possibility of super-normal profits in the short run.
5. Normal profits in the long-run with excess capacity
6. Wider scope of choice to the consumer through product differentiation; the highly competitive business environment allows for improvement in the quality of products at relatively lower prices
Wilfykil answered the question on February 7, 2019 at 09:02
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P2 = Price charged in Market 2
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enable the firm to maximize profits. This firm is a monopolist which sells in two distinct markets, one of
which is completely sealed off from the other.
As part of the analysis, you establish that the total demand for the firm‟s output is given by the
following equation:
Q = 50 – 0.5P
and the demand for the firm‟s output in the two markets is given by the following equations:
Q1 = 32 – 0.4P1 and
Q2 = 18 – 0.1 P2
Where: Q = total output
P = Price
Q1 = Output sold in Market 1
Q2 = Output sold in Market 2
P1 = Price charged in Market 1
P2 = Price charged in Market 2
The cost of production is given by C = 50 + 40Q
Where C = total cost of producing bread.
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Date posted: February 7, 2019. Answers (1)
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enable the firm to maximize profits. This firm is a monopolist which sells in two distinct markets, one of
which is completely sealed off from the other.
As part of the analysis, you establish that the total demand for the firm‟s output is given by the
following equation:
Q = 50 – 0.5P
and the demand for the firm‟s output in the two markets is given by the following equations:
Q1 = 32 – 0.4P1 and
Q2 = 18 – 0.1 P2
Where: Q = total output
P = Price
Q1 = Output sold in Market 1
Q2 = Output sold in Market 2
P1 = Price charged in Market 1
P2 = Price charged in Market 2
The cost of production is given by C = 50 + 40Q
Where C = total cost of producing bread.
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Date posted: February 7, 2019. Answers (1)