Monopolistic Competition

Question 1

What are the characteristics of a monopolistic competition?

Answer 1

Monopolistic competition is characterized by:

• Large number of sellers
• Firms sell differentiated product, or ones that are similar but not identical
• Product has a close substitutes
• Market entry and exit are easy to carry out

Question 2

How do you determine where the firms will produce and maximize income?

Answer 2

MC=MR