Chapter 25 Monopolistic Competition

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10 Terms

1
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Example of monopolistic competition

Fast food and cosmetics

<p>Fast food and cosmetics</p>
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Profit maximizing output for mono comp

MC = MR

<p>MC = MR</p>
3
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Long run profits or zero economic profits for mono comp

Zero economic profits or normal profits, P = ATC

<p>Zero economic profits or normal profits, P = ATC</p>
4
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Why is there no LR profits in mono comp?

Low barriers to entry

<p>Low barriers to entry</p>
5
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Number of firms in monopolistic competition

10-12

<p>10-12</p>
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Control over price in mono comp

Minimal

<p>Minimal</p>
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Advertising in mono comp

Yes

<p>Yes</p>
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Is mono comp Allocatively Efficient?

No, P > MC

<p>No, P > MC</p>
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Is mono comp Productively Efficient?

No, P > minimum ATC

<p>No, P > minimum ATC</p>
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Produce vs. Shutdown

P >= AVC

<p>P >= AVC</p>