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Microeconomics course

Microeconomics course - it just adds another consumer...

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Microeconomics Chapter 11 Monopolistic competition – characterized by a relatively large number of sellers, differentiated products, and easy entry to, and exit from the industry. Product differentiation - the process of distinguishing the differences of a product or offering from others, to make it more attractive to a particular target market Non-price competition – making price less of a factor, and product differences a greater factor Excess capacity – the gap between the minimum-ATC output and the profit-maximizing output, in monopolistic competition Oligopoly – characterized by a few firms where any one firm can influence prices 1) Monopolistic competition differs from pure competition in the sense of the consumer’s options. Where in monopolies, one firm controls the products and consumers must purchase them, in pure competition, the consumer is in complete control with the decision to purchase whichever product they wish. As firms enter these types of markets,
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Unformatted text preview: it just adds another consumer option to the demand curve. 2) In the long-run, monopolistic competition leads the company to zero economic profit, where pure competition it is impossible for a firm to earn abnormal profit. In the long run of monopolistic competition, marginal cost is less than the price. 3) When the consumer buys products that are similar to the monopolys products. At this point, the money is being distributed beyond the monopoly. 4) This is something that holds true when it comes to which product the consumer will purchase. Since most of the products are the same, it may come down to the execution of service to the consumer. In this instance, it becomes more important for monopolies not to change the product, but instead the means of which the consumer must obtain it. This is why non-price competition is important to them....
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