Part 2 Most firms and businesses in our economy operate under monopolistic compe

Part 2

Most firms and businesses in our economy operate under monopolistic competition, and product differentiation in this market type is one of the main factors that lead to price differentiation. In addition and because prices affect quantity demanded inversely (higher prices lead to lower quantity demanded, and lower prices lead to higher quantity demanded), marginal revenue (the additional revenue obtained from producing and selling an additional unit of output) will always be lower than prices on the demand curve because lower prices leads to lower revenue.

Please review the following simple yet useful video that explains the concepts of costs and profits.

• Revenue, Profits and Prices

Because ease of entry is high in both perfect competition and monopolistic competition markets, and because making economic profits will always attract new producers (entrants), how do firms survive and make profits in those markets?

Provide an example of a firm or a small business from the real world that is surviving the dynamic nature of monopolistic competition and discuss some approaches they have used (or are currently using) to compete and survive in the market.

In addition, provide an example or a scenario from your personal (or professional) experience, an observation, a story that you have read, or an idea or a thought that you might have for practical, creative, and/or effective ways to minimize production costs in order to maximize profits.

Part 3 Reply to discussion

Demonopolizing The Government!!??

Great discussion everyone,

Antitrust laws were introduced to ensure fair competition, which will lead (in theory) to the highest level of consumer and producer surplus.

If the government, and through the enforcement of antitrust laws, believes the presence of competition in the marketplace achieves the highest level of market efficiency and fosters economic growth, why do governments have monopoly in providing some services such as DMV offices, professional licensing, business licenses, policing, public transportation, etc.? Is there efficiency in the government monopoly model? Or is there a room for improving efficiency in government agencies? Do you think we will have better public services if the government has competition?

Explain, defend your answer, and give example if possible.

Part 4 reply to discussion

Hello classmates and Professor,

A company that is staying ahead of this ever evolving world is DoorDash. During the pandemic, people weren’t able to leave their home to get essentials and feed their families. Many places would only let a select few people in at a time to adhere to the company 6ft enforced rules. DoorDash made it very convienant for people to have access to everything they need. Now, they have a new feature where people can pay with cash upon delivery. You can save on gas, save precious time, & use cash. Plus, they are always adding new partners to ensure access to anything. They offer deals such as coupons & are usually very helpful in resolving any issues.