MONOPOLISTIC COMPETITION

MONOPOLISTIC - MONOPOLISTIC COMPETITION Competition Competition Manysellers Manysellers Freeentryandexit Freeentryandexit NonPriceCompeti

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MONOPOLISTIC  COMPETITION
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Attributes of Monopolistic  Competition Many sellers Product differentiation Free entry and exit Non Price Competition- advertising Control over price within a range Attributes of Monopolistic  Competition Many sellers Product differentiation Free entry and exit Non Price Competition- advertising Control over price within a range
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Monopolistic Competition Product Differentiation Each firm produces a product that is at  least  slightly different  from those of other  firms. Rather than being a price taker, each firm  faces a  downward-sloping demand curve .
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£ Q O Q s AR = D MC AC MR Short-run equilibrium of the firm under monopolistic competition P s AC s
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The Monopolistically Competitive Firm  in the Short Run  Short-run economic profits encourage new  firms to  enter the market . This: Increases the number of products offered. Reduces demand faced by firms already in the  market. Incumbent firms’ demand curves shift to the  left. Demand for the incumbent firms’ products fall, 
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This note was uploaded on 01/27/2012 for the course ECONOMICS SLEC501 taught by Professor Smohe during the Spring '11 term at IBS DE.

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MONOPOLISTIC - MONOPOLISTIC COMPETITION Competition Competition Manysellers Manysellers Freeentryandexit Freeentryandexit NonPriceCompeti

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