Chapter 15 - Monopolistic Competition

Question 1

monopolistic competition

Answer 1

A common form of industry (market) structure in the United States, characterized by a large number of firms, no barriers to entry, and product differentiation.

Question 2

product differentiation

Answer 2

A strategy that firms use to achieve market power. Accomplished by producing products that have distinct positive identities in consumers’ minds.

Question 3

horizontal differentiation

Answer 3

Products differ in ways that make them better for some people and worse for others.

Question 4

behavioral economics

Answer 4

A branch of economics that uses the insights of psychology and economics to investigate decision making.

Question 5

commitment device

Answer 5

Actions that individuals take in one

period to try to control their behavior in a future period.

Question 6

vertical differentiation

Answer 6

A product difference that, from everyone’s perspective, makes a product better than rival products.