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1. How does monopolistic competition differ from pure competition in its basic characteristics?

2. How does it differ from a pure monopoly?

3. Explain fully what product differentiation may involve.

4. Explain how the entry of firms into its industry affects the demand curve facing a monopolistic competitor and how that, in turn, affects its economic profit.

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Joshua Stredder
Joshua StredderLv10
28 Sep 2019
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Related questions

10) For the Monopolistic Competition Market Structure

a) List and explain the characteristics of monopolistic competition and compare them to the characteristics of pure competition and monopoly.

i) Please discuss monopolistic competition, list and explain the characteristics.

b) List and explain the characteristics of product differentiation. Provide 3 examples of companies actually using this technique and the impact of that differentiation had on the firms’ performance.

i) Product differentiation is a key concept of microeconomics. Please list and explain the characteristics.

c) You are a business manager at a monopolistically competitive firm. One of your newly hired workers wants to know the conditions under which the monopolistically competitive firm in the short run will maximize economic profit or minimize economic loss. Please explain these two things to your new employee. Be thorough.

i) Please use the MR MC approach in your answer.

Recall the 3 market structures:

Pure competition, monopoly and monopolistic competition

(A) What degree of differentiation of product do we observe in each?

(B) How is pricing determined in each?

(C) What barriers to entry are found in each?

(D) What is the relative slope of the demand curve for each (flat, mildly sloping, steeply sloping);

(E) How many firms do we typically observe in each, relative to the other market types?

***Original as much as possible please****

1.Why is it that firms can earn profits in the long run inmonopoly and oligopoly but not in monopolistic competition andperfect competition?

2. As an industry moves from being a monopoly to a monopolisticallycompetitive one (due to the entry of new competitors as themonopoly's patents expire, for example), what happens to theelasticity of the demand curve facing the firm? Why?

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