monopolistic competition

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4 Terms

1
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what are the 8 features of this market

  1. low barriers to entry and exit

  2. imperfect information

  3. many small firms

  4. differentiated products

  5. productive and allocative inefficiencies

  6. dynaemic efficient only in long run

  7. non-price competition

  8. only supernormal profits in short run

2
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what are three evaluations.

  1. habitual behaviour reduces elasticity

  2. assumption of profit maxamisation, may be small family run establishments

  3. Assumption of low barriers, always a degree of sunk costs and start-up costs.

3
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what is one advantage and one disadvantage of monopolistic competition

consumers have more choices as each firm tries to differenciate their products firms will spend more money on rnd and advertisment which pushes up ac curve

4
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example of monopolistic industry

hairdressers