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JUAN A. ARDALES JR.

II
BSBA – III(FM)

1. Give the characteristics of Monopolistic competition and explain each characteristics.

Large Number of Small Firms

This means that every firm in the industry there is more than one firm to compete with each other.
Also means that if one firm sells for $5 dollars everybody must also sell $5 dollars for them to
compete to other because if they make it for $10 dollars it must be a rise risk for them to lose their
customer and go for there competitor.

Similar, But Not Identical Goods

This means that every firm offers the same product but have a minimal differentiation to
each other. The term used is product differentiation this is to give each monopolistically
competitive a little bit of monopoly. Product differentiation also have (3) categories, (1) physical
difference, (2) perceive difference, (3) support service reference. This also means that the goods
they produce is close to each other but not a substitute for good that they produce.

Resource Mobility

This is if one firm wants to enter or out an industry he have the capacity or he is free to do that if
they have unrestricted by the government, capacity to start-up cost, capital, or other substantial
barriers to entry.
For example.
The Azagra company have a clothing shop but she wants to enter a vulcanizing shop, she
can do that without restriction.
Extensive Knowledge

This means that consumer have not completely know all the information about the products/goods
that they are using but certainly know a little bit of that. For example they know what is the brand
name and the logo but they don’t know what it is made of or how it is done.

2. Give unique characteristic of an oligopolistic industry. Explain each characteristic.

Small Number of Large Firms

This means that the small number of large firms dominated the overall market because they are
much larger than the market.
For example a Desembrana company has 20 firms in the market and it control about 75% of the
the total isdustry sales.

Identical or Differentiate Products

The oligopoly produced identical product and also a differentiated product like monopolistic
competition. This have a (2) varieties

1. Identical product oligopoly: this is the process of raw materials to intermediate goods like
steel and petroleum.

2. Differentiate product oligopoly: it focuses for goods sold for consumption.

Barriers to entry

This is to attain or retain market control through exclusive resource ownership, patents and
copy rights, other government restriction and high start-up cost.
3. Give causes of income inequality, and explain each.

a. Education affects wages: in the level of education determined the wages of individual
because the higher the education attainment the higher the position you might get.
b. Gender: it also affects the wages of individual we all know that male is different from
female because only men can do a heavy work but women can’t do that’s why men
accept more wages then women.

https://sevenpillarsinstitute.org/causes-economic-inequality/

4. When does labor discrimination occur in the market? Give example.

This is the discrimination based on gender, race, religion, physical, age and sexual
orientation

For example: the SML company hire employee based on age they only accept ages from
18 – 25 years old only. It is simplifying that they are discriminated the ages 26 above but
can do the job and perform it.
https://en.wikipedia.org/wiki/Employment_discrimination

http://www.amosweb.com/cgi-bin/awb_nav.pl?s=wpd&c=dsp&k=oligopoly,+characteristics

http://www.amosweb.com/cgi-
bin/awb_nav.pl?s=wpd&c=dsp&k=monopolistic+competition,+characteristics

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