Lesson 34 pg. 94 - 96

Question 1

Describe monopolistic competition

Answer 1

> third type of market
each firm promotes a differentiated product
because products are not exactly the same, firms in the industry do have a measure of control over the prices they set on the products
however, if prices too high, new firms will enter market and force prices back down
don’t make long-term true profits
must have three following characteristics: large number of firms in market, firms providing differentiated products, firms able to easily enter or exit market