Re: ::: vuaskari.com ::: ECO401 MCQs discussion threads

Sis binish please can you elaborate it more. your reference and question is not very clear. Specially what is meant by point no.2 and 3. and how you can justify this with given reference.

sukria

On Tue, Oct 11, 2011 at 10:30 PM, Admin Binish <greyferry@gmail.com> wrote:

The textbook for your class was not produced in a perfectly competitive industry because:

       ► There are so few firms in the industry that market shares are not small, and firm's decisions have an impact on market price.

       ► Upper-division microeconomics texts are not all alike.

       ► It is not costless to enter or exit the textbook industry.

       ► All of the given options.

Entry and exit: Barriers to entry are high.^[2] The most important barriers are economies of scale, patents, access to expensive and complex technology, and strategic actions by incumbent firms designed to discourage or destroy nascent firms. Additional sources of barriers to entry often result from government regulation favoring existing firms making it difficult for new firms to enter the market.^[3]

Number of firms: "Few" – a "handful" of sellers.^[2] There are so few firms that the actions of one firm can influence the actions of the other firms.^[4]

Long run profits: Oligopolies can retain long run abnormal profits. High barriers of entry prevent sideline firms from entering market to capture excess profits.

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