Class Notes (808,753)
Canada (493,377)
Economics (582)
ECON 1050 (115)
H.Brand (15)

Lecture: Monopolistic Competition

5 Pages
Unlock Document

University of Guelph
ECON 1050

MICROECONOMICS Monopolistic Competition Overviewprice and output decisions in the long run and the short runadvertising costs and the importance of brand namesIntroductionmonopolistic competition market structure defined by o large number of competing firmseach firm has small market sharelimited influence on product priceeach firm sensitive to average market price but no firm pays attention to others actionsno one firms actions directly affect the actions of otherscollusion conspiring to fix prices impossible in this competition o differentiated productseach firm makes a slightly different product than competing firmsmarketing required o competition based on quality price and marketingdemand for each firms product is downward slopingtradeoff between price and quality o free entry and exitfirms cannot make an economic profit in the long runexamples AV equipment clothing jewelry computers sporting goodsPrice and Output Short Run Decisions Price and Output in Monopolisticfirm has decided quality of product and marketing programfirm operates as a singleprice monopoly Competition o firm produces at profitmaximizing quantity PMQMRMC o price determined from demand curve for firms producthighest price that the firm can charge for the PMQ The firm in monopolistic o earns economic profit when PATC competition operates like a singleprice monopolyThe firm produces the quantity at which MR equals MC and sells that quantity for the highest possible price It earns an economic profit as in this example when PATC 2010 Pearson Education Canada
More Less

Related notes for ECON 1050

Log In


Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.