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Monopolistic Competition
16 Monopolistic Competition
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Table 1 Examples of Markets Which Have Characteristics of Monopolistic Competition
Copyright © Cengage Learning
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Figure 1 Monopolistic Competition in the Short Run (1)
(a) Firm makes profit Price MC ATC Demand MR Profit- maximizing quantity Price Average total cost Profit Quantity Copyright © Cengage Learning
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Figure 1 Monopolistic Competitors in the Short Run (2)
(b) Firm makes losses Price MC ATC Losses Loss- minimizing quantity Average total cost Demand Price MR Quantity Copyright © Cengage Learning
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Figure 2 A Monopolistic Competitor in the Long Run
Price MC ATC Demand MR Profit-maximizing quantity P = ATC Quantity Copyright © Cengage Learning
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Figure 3 Monopolistic versus Perfect Competition
(a) Monopolistically competitive firm (b) Perfectly competitive firm Price Price MC ATC MC ATC Demand MR P Quantity produced Efficient scale P = MC MR (demand curve) Quantity produced = Efficient scale Quantity Quantity Copyright © Cengage Learning
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Figure 3 Monopolistic versus Perfect Competition
(a) Monopolistically competitive firm (b) Perfectly competitive firm Price Price MC ATC MC ATC mark-up Demand MR P Quantity produced P = MC MR (demand curve) Quantity produced Marginal cost Quantity Quantity Copyright © Cengage Learning
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Figure 3 Monopolistic versus Perfect Competition
(a) Monopolistically competitive firm (b) Perfectly competitive firm Price Price MC ATC MC ATC mark-up Demand MR P Quantity produced Efficient scale P = MC MR (demand curve) Quantity produced = Efficient scale Marginal cost Quantity Quantity Excess capacity Copyright © Cengage Learning
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Figure 4 UK Advertising Spending Share, 2008
Copyright © Cengage Learning
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Table 2 Monopolistic Competition: Between Perfect Competition and Monopoloy
Copyright © Cengage Learning
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