Monopolistic Competition Flashcards
1
Q
Monopolistic Competition
A
- Many Producers
- Differentiated Product
- No competition
- Free entry and exit
- Downward-sloping Demand Curve
2
Q
3 types of differentiation
A
- Style or Type
- By location
- By quality
3
Q
Competition among Sellers
A
Producers compete for same market
More producers ~~> less quantity sold
4
Q
Value in diversity
A
Consumers gain from increased diversity of products
5
Q
Short Run Competition
A
- Downward Sloping Demand Curve
- Downward Sloping Marginal Revenue
- Upward Sloping Marginal Cost
- U shaped ATC
- ATC crossing demand curve
6
Q
Long Run Competition
A
- ATC touches Demand Curve
7
Q
Zero-Profit-Equilibrium
A
Just breaks even
Equilibrium of monopolistically competitive industry
8
Q
Exceed Capacity
A
Firms produce less then the output at which ATC is minimum
9
Q
Advertising
A
Firms advertise to increase demand
10
Q
Brand Names
A
Some firms create brand names
Name owned by particular firm that distinguishes its products from other firms’
