Chapter9part23

Chapter9part23 - AGEC 105 Chapter 9 Imperfect Competition...

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Chapter 9 Imperfect Competition Part 2 AGEC 105
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2 Monopolistic Competition And Oligopoly On any given day, you are probably exposed to hundreds of advertisements Advertising is everywhere in the economy So far in this book not much has been said about advertising Where, then, is all the advertising coming from? We must consider firms that are neither perfect competitors nor monopolists: Monopolistic Competition Oligopoly
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3 Monopolistic Competition Hybrid of perfect competition and monopoly, sharing some of features of each A monopolistically competitive market has three fundamental characteristics Many buyers and sellers Sellers offer a differentiated product Sellers can easily enter or exit the market
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4 Monopolistic Competition in the Short-Run Individual monopolistic competitor behaves very much like a monopoly Key difference is this While a monopoly is the only seller in its market, a monopolistic competitor is one of many sellers When a monopolistic competitor raises its price, its customers have one additional option Can buy similar good from some other firm
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5 A Monopolistically Competitive Firm in the Short Run MR 1 $70 30 250 d 1 A MC ATC Dollars Homes Serviced per Month 2. and charges $70 per home. 4. Kafka's monthly
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This note was uploaded on 12/01/2010 for the course AGEC 105 taught by Professor Capps during the Summer '08 term at Texas A&M.

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Chapter9part23 - AGEC 105 Chapter 9 Imperfect Competition...

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