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In Monopolistic Competition, entry to industry is
more difficult than under pure competition, but not nearly as difficult as pure monopoly
advertising product promotion and changes in the real or perceived characteristics of a product
Monopolistic Competition firms may realize either profits or losses in the short run, but realize _____ in the long run
Monopolistic Competition in the short run
a profit maximizing firm sets it's price above marginal cost
Monopolistic Competition in the long run
a profit maximizing firm sets it's price about marginal cost and will be equal to average total cost (ATC); new firms will enter industry until economic profits are zero
refers to the amount by which actual production falls short of the minimum ATC output
Monopolistic Competitive Industries are inefficient because
they are over populated with firms whose plants are under utilized
Oligopoly indicates ____ firms with either ______ or ______ products
few; homogeneous; differentiated
exist where a small number of firms are producing virtually identical products
exists where a small number of firms are producing goods that differ in terms of quality and design
Examples of Differentiated Oligopoly
automobile, household appliance, and automobile tire industries are examples
Oligopoly is difficult to analyze because
the price and output decision for any one firm depends on the reactions of it's rivals
each oligopolistic firm must consider the reactions of it's rivals when it determines it's price policy
in some markets the producers of a particular product might face competition from product produces by other industries
The likelihood of a Cartel being successful
is greater when cost and demand curves of various participants are very similar
Cartels are difficult to maintain in the long run because
individual members may find it profitable to cheat on agreements
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