Monopolistically competitive markets Flashcards
1
Q
Profit max when?
A
When MR = MC
2
Q
entry of businesses shifts demand curve _______
A
left
3
Q
Imp point(Price Markup)
A
P > MC
And in long run P = ATC (0 econ profit)
4
Q
Excess Capacity
A
Producing less Q than efficient scale in long run equilibrium.( where Demand is tangent to ATC)
5
Q
Product Variety Externality
A
Additional consumer surplus due to new product. So more firms entering means positive externality for consumers
6
Q
Business stealing externality
A
Negative externality for existing businesses
