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Econ chapter 13

Econ chapter 13 - Chapter 13 monopolistic competition and...

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Chapter 13- monopolistic competition and oligopoly Market structures- refers to the physical characteristics of the market within which firms interact. Equilibrium of a monopolistic competitor. Difference between a monopolist and a monopolistic competitor is in the position of the average total cost curve in long-run equilibrium Goals of advertising include shifting the firm’s demand curve to the right and making it more inelastic. Monopolistically competitive firms advertise because their products are differentiated from each other. Advertising can convince people that a firms product is better than that of other firms and increase demand for its product. Perfect competitors have no incentive to advertise their products because their products are the same as every other firms and they can sell all they want at the market price. Monopolistic competitors do not take into account the expected reactions of competitors to their decisions they cannot use strategic decision making. ----OGLIOPOLIES USE IT
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