Section_Seven_PPT_08 - S ction S ve e en I m rfe C pe pe ct...

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Section Seven Section Seven Imperfect Competition: Monopolistic Competition and Oligopoly
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We’ve now discussed the two extreme ends of the spectrum. Perfect competition has many sellers all selling an identical product. Each firm is a price taker. Pure monopoly has one firm selling a product with no close substitutes. The firm is a price maker. There are two other models that fall between these two.
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Monopolistic competition …falls toward the end of perfect competition but not as extreme. Oligopoly …falls toward the end of pure monopoly, but not as extreme. We will start with a closer look at monopolistic competition.
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Monopolistic Competition Monopolistic Competition Characteristics: 1. relatively large number of sellers ...means each has small percentage of total supply…each has a limited amount of control over price 2. Relatively easy entry and exit into the industry
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3. Sellers offering similar but not identical products some differences are real/physical
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Section_Seven_PPT_08 - S ction S ve e en I m rfe C pe pe ct...

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