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Unformatted text preview: Chapter 11 Product differentiation- the different firms in an industry make products that are noticeably different Market structures- the four categories that economists have found to classify industries based on the way in which the firms interact with each other in a given industry Concentrated industry- an industry dominated by a small number of firms Monopolistic competition- has a large number of producers, easy entry and exit, production differentiation and has frequent use of non-price competition. Under monopolistic competition buyers recognize that the products are not the same. As a result, firms may engage in advertising . By advertising the firm tries to affect the shape and location of its demand curve. Advertising is one form of non-price competition . Each monopolistic competitive firm faces its own, unique demand curve. It is downward. They maximize profit where marginal revenue equals marginal cost. The long-run tendency of monopolistically competitive industry is toward equals marginal cost....
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This note was uploaded on 12/04/2011 for the course EC 201 taught by Professor Haider during the Fall '10 term at Michigan State University.
- Fall '10