2.11e Flashcards
1
Q
characteristics of monopolistic competition(3+eg)
A
a) Large number of independent firms
b) Slightly differentiated products with close substitutes
c) Free Entry & Exit
Real-life egs: are small independent restaurants, fashion boutiques, grocery stores, hawker food stalls, small barber shops, car repair garages & independent private clinics, etc.
2
Q
free entry and exit leads to
A
compete away abnormal profit
cant have abnormal profit in long term.
when losses, free exit till normal profit is made
3
Q
in the short run, 3 types of profit
A
normal
abnormal
subnormal
