Textbook Notes (368,460)
United States (206,052)
Economics (276)
ECON 1116 (137)
Chapter 13

ECON 1116 Chapter 13: Chapter 13- Monopolistic Competition

1 Page
Unlock Document

ECON 1116
Michael Stone

Chapter 13- Monopolistic Competition-The Competitive Modeling More Realistic Setting • Monopolistic Competition- a market structure in which barriers to entry are low and many firms compete by selling similar but not identical products Demand/ Marginal Revenue for a Firm in Monopolistically Comp. Market • Downward sloping demand curve • A monopolistically competitive firm must cut the price to sell more, so its marginal revenue curve will slope downward and will be below its demand curve • Average Revenue- always equal to price • When price is cut there is one good thing/ one bad thing—good-sells more//bad- receives less for each product • ***Every firm that has the ability to affect the price of a good or service it sells will have a marginal revenue curve that is below its demand curve How Monopolistically Comp. Firm Maximizes Profit in Short Run • produce the quantity where marginal revenue is equal to marginal cost • charge price where it hits the demand curve!!! What Happens to Profit in the Long Run • Demand curve shifts to the left (as more firms enter) and becomes elastic since there are more substitutes • Firms no longer earn an economic profit • Firm is breaking even whe
More Less

Related notes for ECON 1116

Log In


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.