Chapter 17

Chapter 17 - * Markup: P>MC Inefficient, but its...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 17: Monopolistic Competition - Many sellers - Differentiated products - Free entry/exit: shifts demand of sellers in market - Downward sloping demand - Profit max same as monopoly: mr=mc to demand - P=ATC in long run > MC - Incentive to advertise since product is differentiated - * Con: subconscious message, distorted perception Pro: gives info/promotes competition (lower price) - More advertise for products that consumers will like and buy over and over again - Brand= quality reassurance= consumer perception distortion = some product info.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
* Excess capacity: could have produced more
Background image of page 2
Background image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: * Markup: P>MC Inefficient, but its better than having gov subsidize and lower the price New product = pos externalities Entry= neg externalities on existing firms Differentiated products spend lots on advertisement, homogeneous spends nothing Advertisements makes the market more competitive *Lowers the price of the good Could convey quality, more money since the product is good Brand name distorts perception but conveys info and gives incentive to maintain quality Imperfect, but nothing can be done to improve it...
View Full Document

Page1 / 3

Chapter 17 - * Markup: P>MC Inefficient, but its...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online