Tag Archives: Range

Monopolistic competition market is a market closer to reality. Monopolistic market will depend on a company’s ability to influence the market.

Monopolistic market is a market in which there are many sellers or manufacturers. Items in the market will undifferentiated among a wide range of products produced by manufacturers. The existence of product differentiation means that there is the ability of manufacturers to influence the selling price of its products even though the effect is very small.

The characteristics of monopolistic competition are as follows.

a. There are many sellers. The number of sellers is many in markets, but not as much as in perfect competition. In addition, the amount of production of each firm is relatively small compared to the total amount of goods in the market.

b. Goods are different complexion. Monopolistic competition in goods markets and different patterns can be distinguished between the results of one company’s products with other companies. Style differences may be physical, wrapping or packaging, post-sale services, and ways of payment.

c. The company has little power in influencing prices. Companies in competitive markets have monopolistic power to influence prices in the market, but the effect is relatively small. This power is sourced from the different nature of the items feature that makes the consumer free to choose.

d. The ease to get into the industry or market. Companies can easily to get into the market of monopolistic competition. Therefore, companies must produce a different style with items already on the market and do promotions to attract consumers.

e. The existence of the effectiveness of sales promotions. With items of different shades, the company must be able to influence the tastes of buyers. Way that can be taken, among others advertise their products continuously, improve the quality and goods design, and provide good service.

Advantages of monopolistic competition market

Given this competitive market, consumers are free to choose a good variety of goods of the kind, quality, model, and the price level. This causes the consumer will get optimum satisfaction.

Monopolistic competition market weakness

- There are still many companies who work less efficiently utilize resources in the economy because it is mostly small companies.

- Costs incurred to obtain consumer goods higher than the marginal cost to produce goods. Conversely, costs incurred to pay for labor only for the MC, which means lower than the value of goods produced.

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National income is the amount of income received by the public or the owners of factors of production in a country during a certain period of time (usually used measure of time 1 year). When we look back on the current circle of economic activity, household consumption deliver production factors services to the company, and they will receive rental income as remuneration of land, wages and salaries as remuneration of labor, remuneration rates as capital and operating income or benefits as a consideration for entrepreneurs. So, all revenues in return for supply of production factors of all the factors are called National Income.

National income in terms of three approaches:
1. National income from the production approach
2. National income from the income approach
3. National income from the expenditure approach

Components of national income
For more details, below described components of national income is viewed from three sides, namely:

1. Components of national income from the production side
The calculation of national income by the method of production is by adding up the value added of all goods and services. Thus, the components of national income from the production side, namely: product range, number of products sold from a wide range of products, and selling price.
So for more brevity formulated as follows: NI = PQ
Where NI is the National Income
P is the selling price of a product
Q is the result of production

2. Components of national income from the expenditure side
From the expenditure side, the national income is calculated by adding up the expenditures of each sector in the economy, namely:
a. family sector or consumer sector
b. corporate sector or producers sector
c. government sector
d. foreign trade sector
When such components are written in the form of the equation, it would appear as follows: GNP = C + I + G + (XM)
Where: GNP is gross national income
C is consumption expenditures for goods and services
I was spending for investment
G is government spending for goods and services
X is the value of exported goods
M is the value of imported goods
X-M is net exports

3. component of national income from the income side
In terms of income, national income is calculated by summing the income received by factors of production, which consist of rent, wages and salaries, interest, and profits.
Thus, the components of national income from the revenue side are:
a. Rent or abbreviated r.
b. Wages and salaries or abbreviated as w.
c. Interest or abbreviated as i.
d. Operating income (profit) or abbreviated as p.
Thus, in the form of equations can be formulated: NI = r + w + i + p

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