Monopolistic Competition Flashcards
What are the features of a monopolistic competition?
Many firms, differentiated products, downward sloping demeans curve, free entry and exit in the long-run and perfect knowledge
What does a monopolistic competitive market make in the short-run?
Abnormal profit
When does a firm maximise profits in a monopolistic competitive market in the long-run?
When MR=MC and AR=AC
How does monopolistic competition compare to perfect competition?
Economies of scale, differentiated profits, non-price competition, excess capacity and less efficiency
How does monopolistic competition compare to a monopoly
More firms, free entry and exit, more efficient, fewer of economies of scale and less innovation
What is marketing?
The action of promoting and selling products
What does the marketing mix consist of?
Price, product, place and promotion
In a monopolistic competition, is non-price competition more important or is price-competition?
Non-price competition
What are porters 5 forces?
Power of customers, power of suppliers, threat and market entry, threat from substitutes and intensity of rivalry
How can an industry reach high profitability?
If there are not many firms in the industry, market is difficult to enter, few substitutes, power of suppliers are weak and power of buyers are weak
