Micro Ch 12: Monopolistic competition + advertising

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Microeconomics

Last updated 10:29 PM on 12/14/22
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5 Terms

1
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monopolistic competition
a market structure with low entry barriers and many firms selling products differentiated enough that each firm's demand curve slopes downward
2
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Product differentiation
the process firms use to make a product more attractive to potential customers
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Products differ by
Style or type + location + quality
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Markup
the difference between the price the firm charges and the marginal cost of production
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excess capacity
when a firm produces at an output level that is smaller than the output level needed to minimize average total costs