Question

. A classic example of monopolistic competition is the restaurant industry. In what ways does this industry show the characteristics of the monopolistic competition market?

2. George says, "If the amount of product differentiation in a monopolistically competitive industry is very small, the outcome in that market will not be very different than if it were a perfectly competitive industry." Explain if he is correct and how you would respond to his reasoning.

3. The duopolist dilemma is that each firm would make more profit if both picked the _______ price, but both firms pick the _____ price. Explain why they do this.

4. What are the characteristics of an oligopoly? Using the concept of duopoly and the price leadership model, discuss demand and pricing strategies in an oligopolistic market structure.

5. Critical Thinking: Most of the products you buy at a grocery store come from what type of competitive market? Why do you think this is so?