Final Exam - Lecture 3 Notes Flashcards
What is the government’s responsibility in a market?
for there to be competition
4 Types of Businesses
- Perfect Competition
- Monopolistic Competition
- Oligopoly
- Monopoly
What type of the two businesses are most common in the world?
(Most are the middle two!)
Oligopoly and Monopolistic competition
• Product differentiation
◦Make consumers think your product is better than the competition
◦Non-price Competition
They change your buying behavior something other than price becomes important to
you.
◦Doesn’t have to be a real difference -
can be perception
◦The key to understanding businesses is
product differentiation
◦The most successful businesses differentiate there _____.
product.
◦Monopolistic competition and oligopoly builds there lives around ______ ________.
product differentiation
• Monopolistic competition
◦Many small firms
◦Free entry and exit
◦Differentiated products
◦Come control over market, limited by free entry of competitiors
Examples of Monopolistic competition
Gardner, people who cut your hair, etc.
In a Monopolistic competition, what do they try to convince you with?
◦they do something to convince you to believe that they are better than the other guy
◦Most businesses fall in the category of ?
monopolistic competition
How do you get the control?
differentiating your product
What will big companies do to small companies if they innovate something good ?
copy them / replicate
