Chapter 16 - Chapter 16 Monopolistic Competition Things to Know Consumer has most of the power but there is advertising and brand loyalty so we have

Chapter 16 - Chapter 16 Monopolistic Competition Things to...

This preview shows page 1 - 2 out of 2 pages.

Chapter 16 Monopolistic Competition Things to Know Consumer has most of the power, but there is advertising and brand loyalty so we have loss some of the power. Definitions Characteristics of Monopolistic Competition: 1. Many sellers 2. Product differentiation 3. Easy entry and exit 4. Business has some control over price 5. Considerable emphasis on advertising and trademarks What distinguishes one market structure from another? (perfect, monopoly, and monopolistic competition) 1. The number of firms 2. Type of product sold Elements of the Monopolist’s Rule 1. Output is where marginal revenue = marginal cost a. Where profit is maximized (for all 3 graphs) 2. The price should be set using the demand curve a. Monopoly and monopolistic competition Elements of market entry for Monopolistic Competition 1. Firms make a profit 2. Increase in the number of products 3. Demand curve faced by each firm shifts to the left a. Market share goes down 4. Demand falls for each firm 5. Firms experience declining profit Elements of market exit
Image of page 1
Image of page 2

You've reached the end of your free preview.

Want to read both pages?

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes