A downward sloping consult curve cannot be tangent so you can efficiency LAC contour at the minimal. For this reason as compared to perfect competition there will be a lot of capabilities.
Throughout the significantly more than drawing qc is ideal race productivity, qp was monopolistic battle returns not as much as speed competition and you can qn try monopolistic race output not as much as rates competition.
According to Chamberlain, best competition can’t be considered as finest away to possess monopolistic competition. When you look at the monopolistic race on account of downwards sloping demand curve most useful production could be remaining out-of at least LAC.
Provided you will find rates competition and you may free entry, the tangency point within company’s consult curve as well as the LAC bend manage lead to the greatest productivity bbwcupid desktop no excessively strength. It’s price of product differentiation.
They tips the newest dominance as the price of a an excessive amount of to the limited rates. Having finest race P = MC thus Lerner’s directory is actually 0.
In the event of monopoly H will be step 1
In case there are single business market is quicker sensitive to the latest market pricing, whilst in question of great number of agencies marketplace is extremely sensitive to the business costs. Therefore dominance fuel is visible given that inverse regarding rates elasticity away from consult (Ep)
In the event that there are great number of enterprises after that Quand could well be small and thus H, if discover smaller quantity of enterprises next Lorsque would-be higher which means that H. Continue reading