Consumers willingness to pay more for the brand name

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Consumers’ willingness to pay more for the brand-name
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Critics of Branding This was inferred by Edward Chamberlin, one of the early developers of the theory of monopolistic competition, concluded from his argument that brand names were bad for the economy.
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SUMMAR Y Monopolistic Competition
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SUMMARY A monopolistically competitive market is characterized by three attributes: many firms, differentiated products, and free entry. The equilibrium in a monopolistically competitive market differs from perfect competition in that each firm has excess capacity and each firm has a price above
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SUMMARY Monopolistic competition does not have all of desirable properties of perfect competition. There is a standard deadweight loss of monopoly caused by the markup of price over marginal cost.
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SUMMARY The product differentiation inherent in monopolistic competition leads to the use of advertising and brand names. Critics argue that firms use advertising and brand names to take advantage of consumer irrationality and to reduce competition. Defenders argue that firms use advertising and brand names to inform consumers vigorously on
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QUESTIONS 1. Identify at least one firm/ business under this market structure found in Tacloban City? 2. Describe the pricing mechanism. How they set their prices? 3. How they maximize their profit and what are the costs involved in their business? 4. Who are their customers? Characteristics of customers? How they were able to convince
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QUESTIONS 5. What are the restrictions and problems encountered by their business?
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END OF PRESENTATI ON Monopolistic Competition
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