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Chapter 10 - Chapter 10 Monopolies and Other Forms of...

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Chapter 10: Monopolies and Other Forms of Imperfect Competition Imperfectly competitive firms have some control over price, price may be greater than the cost of production, and long=run economic profits are possible Different forms of imperfect competition o Pure Monopoly (most inefficient) The only supplier of a unique product with no close substitutes o Monopolistic Competition (closest to perfect competition) Slightly different products that are basically substitutes of each other Long-run adjustment to zero economic profits Importance of differentiation similar, but NOT the same. See diagram 1 o Oligopoly (more efficient than a monopoly) Industry structure in which a small number of large firms produce products that are either close or perfect substitutes Cost advantages from large size may prevent the long-run adjustment to zero economic profit Undifferentiated and differentiated products
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