Monopolistic Competition

Question 0

Characteristics

Answer 0

Many sellers
Product diff
Free entry

Question 1

Monopolistic competition

Answer 1

Many firms sell products which are similar but not identical

Eg. Computer games

Question 2

Monopolistic competitive firm in the SR

Answer 2

Sloping D curve thus follows monopolies profit max

Same as monopoly

Question 3

Long run

Answer 3

If firms are making profit, new firms enter and the demand curves for the incumbent firms shift to the left
Making loses- old firms exit and demand curves of remaining firms shift to right
Bc of shifts=eventually finds LR equilibrium where P=ATC with zero profit

Question 4

Welfare of society

Answer 4

Same as monopoly

Question 5

The debate over advertising

Answer 5

-firms advertise to manipulate people’s tastes
-impedes competition
But provides info to consumers

Question 6

Branding

Answer 6

The means by which a business creates an identity for itself and highlights the way in which it differs from its rivals