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    Imperfect Competition Structures

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

    Which of the following is (are) most likely to be produced in a market resembling a monopoly - oil, books or movies, tap water, and wheat. Defend your answer in economic terms.

    Which type of firm is most likely to have zero economic profit in the long-run: monopoly, oligopoly, monopolist competition or perfect competition? Explain.

    The government often has two conflicting roles. It protects consumers by keeping prices fair and promotes a free market (entry of firms). Suppose your firm has a special patent. Do you think patent licenses should expire? Be sure to support your argument with references and economic concepts from previous modules as well.

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    Solution Preview

    In compliance with BrainMass rules this is not a hand in ready assignment but is only guidance.

    1.
    The difference between the demand curve facing a monopoly firm and the demand curve facing a perfectly competitive is that the monopoly firm faces a downward sloping demand curve. Remember, that demand curve faced by the monopoly firm is the industry demand curve (1). However, a perfectly competitive firm is a price taker, it faces a horizontal demand curve. It can sell whatever it produces at the market price. It cannot influence the market price.

    2.
    Books or movies and tap water are likely to be produces in a market resembling a monopoly. Specific books have only a single publisher who is the only seller in the market; he faces the industry demand curve for the specific book he ...

    Solution Summary

    The response provides you a structured explanation of different dimensions of imperfect competition. It also gives you the relevant references.

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