CAS EC 101 Chapter Notes - Chapter 16: Monopolistic Competition, Concentration Ratio, Demand Curve
56
CAS EC 101 Full Course Notes
Verified Note
56 documents
Document Summary
Between monopoly and perfect competition: oligopoly: market structure in which only a few sellers offer similar/idenitical products. Concentration ratio: economists measure a market"s domination by a number of small firms with stat: monopolistic competition: market structure in which many firms sell products that are similar but not identical. Competition with differentiated products: the monopolistic competitive firm in the short run. Chooses to produce quantity where marginal revenue=marginal cost: the long run equilibrium. As firms profit, more firms enter the market demand curve shift to the left. Declining profit firms leave, demand curve shift right price increases: stops when firms make zero economic profit. As in monopoly, price exceeds marginal cost. Price=average total cost: monopolistic vs perfect competition. Markup over marginal cost: monopolistic competition and the welfare of society. Markup of price over marginal cost deadweight loss like monopoly. The critique of advertising: more physiological than informative.
