MicroEconomics - Lecture 10

MicroEconomics - Lecture 10 - Monopolistic Competition 1....

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Monopolistic Competition 1. Imperfect Competition: Monopolistic Competition Imperfect competition refers to those market structures that fall between perfect competition and pure monopoly. Type of imperfectly competitive markets Monopolistic Competition; Many firms selling products that are similar but not identical. Oligopoly; Only a few sellers, each offering a similar or identical product to the others. 2. Monopolistic Competition Makerts that have some features of competitions and some features of monopoly. Attributes of Monopolistic Competition Many sellers There are many firms competing for the same group of customers. Product examples include books, CDs, movies, computer games, restaurants, piano lessons, cookies, furniture, etc. Product Differentiation Each firms 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. Free Entry and Exits Firms can enter or exit the market without restriction. The number of firms in the market adjusts until economic profits are zero. 3. In Equilibrium
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MicroEconomics - Lecture 10 - Monopolistic Competition 1....

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