Chapter26

Chapter26 - Economics 101 Chapter 26 I Strategic Behavior...

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10/1/2007 Economics 101 Chapter 26 I) Strategic Behavior entails ascertaining what other people or firms are likely to do in a specific situation and then pursuing tactics that maximize your gains or minimize your losses II) Product Differentiation definition: the process of altering goods that serve a similar purpose so that they differ in minor (either real or imagined) ways differentiation only requires that consumers perceive differences III) Monopolistic Competition definition: requires easy entry and exit into industries in which many potential suppliers compete vigorously with makers of close, but not perfect, substitutes for their brand-name products monopolistic competitive industries have: - large numbers of potential buyers and suppliers - differentiated products that are close substitutes - easy entry and exit in the long run short-run pricing and output - regardless of market structure, all firms maximize profit by producing where marginal revenue equals marginal cost
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Chapter26 - Economics 101 Chapter 26 I Strategic Behavior...

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