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Monopolistic Competition
Learning Objectives:
When you have completed this
chapter you will be familiar with:
1. The monopolistic competitor in the
short and long run.
2. Product differentation.
3. The characteristrics of monopolistic
competition.
4. Price discrimination.
Monopolistic Competition Defined
A monopolistically competitive industry has many
firms selling differentiated product.
• differentiated means the buyer, for whatever reason, makes a
difference between one product and another.
• Identical means the buyer makes no difference between one product
and another product.
• No one firm has any significant influence on price.
The Monopolistic Competitor in
the Short Run
Can make a profit or take a loss.