question archive Though its name can sometimes cause confusion for students, the market structure we call monopolistic competition is so named because it has some features of monopoly and some features of the competition
Though its name can sometimes cause confusion for students, the market structure we call monopolistic competition is so named because it has some features of monopoly and some features of the competition
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Though its name can sometimes cause confusion for students, the market structure we call monopolistic competition is so named because it has some features of monopoly and some features of the competition. a. In what ways is a monopolistically competitive market like a monopoly? In what ways is it like competition? b. Which of the outcomes of monopolistically competitive markets is a direct result of its monopoly-like features? Which outcome is a result of its competitive features? Summarize these results, so that they can be applied to product markets in general?
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A monopolistically competitive market is like a monopoly in the sense that constituent firms are price setters, rather than price takers. However, a firm's price-making ability is usually offset by the fact that demand for products is highly elastic. In order to successfully raise prices, a firm must be able to differentiate its product from the others.
A monopolistically competitive market is like a perfectly competitive market is that there are many firms with a relatively low degree of market power. Barriers to market entry and exit are low, and economic profit approaches zero over the long run.
