monopolistic competition Flashcards
1
Q
number of businesses
A
large number of buyers and sellers
2
Q
nature of the product
A
products are differentiated
3
Q
market entry
A
entrybis easy as there are no barriers such as patents
4
Q
control over price
A
firms have little control over prices
5
Q
demand curve
A
downward sloping curve
6
Q
profit
A
economic profit in short run (attracts new firms to enter as entry is free)
normal profit in long run
7
Q
collusion
A
impossible as there are many sellers
8
Q
productive efficiency
A
inefficient: ac of production is high
9
Q
allocative efficiency
A
inefficient: produces lower quantities than what the consumer wants
10
Q
decision making
A
competitors actions influence on a firms decision making
