Monopolistic Competition Flashcards
1
Q
What is mono comp
A
- most mono are competitive, not perfectly competitive
- some power to set their prices as monoplies do
2
Q
Market structure
A
1) Large number firms compete, small market share, ignore other firms actions, collusion impossible
2) Differentiate produce, close substitute
3) Compete Quality, price, marketing
4) Free enter/exit
3
Q
Graphs, profit, loss, break even
A
- Work out same way as mono (MR = MC go up D, needs be above ATC)
- in Perf comp, D = MR, mark up to D for Mono comp (french connection jacket)
4
Q
Product development and Marketing (how impact output, price, econ profit)
A
1) Innovation & product development (high level profit max MC = MR)
2) Advertising (increase cost, but increase demand - more elastic)
3) Using advertising to signal quality (buy again trust)
4) Brand names (quality)
5) Efficiency of advertising and brand names (know product dif)
5
Q
Final verdict on mono cop ambigious
A
- gains extra variety
- offset selling cost
- less easy see gains buy brad- more drug identical alternative
