5.4 Monopolistic Competition
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4 Terms
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What defines monopolistic competitive market?
Many firms, differentiated products, and relativley free entry and exit
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Why is monopolistic competition subject to non-price competition?
Due to firms selling differentiated products, and is a key way for firms to attract customers without triggering destructive price wars
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Advantages of monopolistic competition
Product variety
Consumer choice
Low barriers to enter and exit
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Disadvantage of monopolistic competition
No efficiencies achieved
Excess capacity
Higher prices than perfect
Excessive spending on advertisement
Note 
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