Microeconomics Monopolistic Competition

Microeconomics Monopolistic Competition - Microeconomics...

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Microeconomics: Monopolistic Competition 30/11/2007 14:33:00 Firms produce the quantity that minimizes average total costs in the long run.  Imperfect Competition: Monopoly: “Single Seller” Oligopoly: “Few Sellers” Monopolistic Competition: Many Sellers, each with a differentiated product. Monopoly: ex. Charter Cable in Athens Oligopoly: ex. The market for wireless telephone service. Monopolistic Competition: Convenience Stores, Gas stations They provide a similar product but they are different.  Five Sources of Monopoly: 1. Exclusive control over important inputs  o Ex. Perrier’s Mineral Spring. 2. Economies of Scale (natural  monopoly) o Ex. Local telephone service o If as quantity increases average total costs go down then you have an  economy of scale.  (Bulk Pricing, specialization) o When, at greater quantities the average costs start to increase we 
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Microeconomics Monopolistic Competition - Microeconomics...

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