Monopolistic competition the competitive model in a more realistic setting
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Monopolistic competition the competitive model in a more realistic setting

Monopolistic Competition:The Competitive Model in a More Realistic Setting


Monopolistic competition the competitive model in a more realistic setting1

Monopolistic Competition:The Competitive Model in a More Realistic Setting

Monopolistic competition A market structure in which barriers to entry are low, and many firms compete by selling similar, but not identical, products.


Demand and marginal revenue for a firm in a monopolistically competitive market

Demand and Marginal Revenue for a Firm in a Monopolistically Competitive Market

1

LEARNING OBJECTIVE

12 - 1

The Downward-Sloping Demand for Caffe Lattès at a Starbucks

The Demand Curve for a Monopolistically Competitive Firm


Demand and marginal revenue for a firm in a monopolistically competitive market1

Demand and Marginal Revenue for a Firm in a Monopolistically Competitive Market

Demand and Marginal Revenue at a Starbucks

12 – 1

Marginal Revenue for a Firm with a Downward-Sloping Demand Curve


Demand and marginal revenue for a firm in a monopolistically competitive market2

Demand and Marginal Revenue for a Firm in a Monopolistically Competitive Market

12 - 3

The Demand and Marginal Revenue Curves for a Monopolistically Competitive Firm

Marginal Revenue for a Firm with a Downward-Sloping Demand Curve


How a monopolistically competitive firm maximizes profits in the short run

How a Monopolistically Competitive Firm Maximizes Profits in the Short Run

2

LEARNING OBJECTIVE

12 - 4

Maximizing Profit in a Monopolistically Competitive Market


What happens to profits in the long run

What Happens to Profits in the Long Run?

3

LEARNING OBJECTIVE

12 - 5

How Entry of New Firms Eliminates Profits

How Does Entry of New Firms Affect the Profits of Existing Firms?

Don’t Confuse Zero Economic Profit with Zero Accounting Profit


What happens to profits in the long run1

What Happens to Profits in the Long Run?

The Short Run and the Long Run For a Monopolistically Competitive Firm

12 – 2

How Does Entry of New Firms Affect the Profits of Existing Firms?


Monopolistic competition the competitive model in a more realistic setting

12 - 2

3

LEARNING OBJECTIVE

  • The Short Run and the Long Run for the Macintosh


What happens to profits in the long run2

What Happens to Profits in the Long Run?

Is Zero Economic Profit Inevitable in the Long Run?

  • A firm’s profits will be eliminated in the long run only if the firm stands still and fails to find new ways of differentiating its product or fails to find new ways of lowering the cost of producing its product.


Comparing perfect competition and monopolistic competition

Comparing Perfect Competition and Monopolistic Competition

4

LEARNING OBJECTIVE

Comparing Long-Run Equilibrium under Perfect Competition and Monopolistic Competition

12 - 6


Comparing perfect competition and monopolistic competition1

Comparing Perfect Competitionand Monopolistic Competition

Excess Capacity under Monopolistic Competition

  • The profit-maximizing level of output for a monopolistically competitive firm comes at a level of output where price is greater than marginal cost and the firm is not at the minimum point of its average total cost curve.

How Consumers Benefit from Monopolistic Competition

Consumers benefit from being able to purchase a product that is differentiated and more closely suited to their tastes.


How marketing differentiates products

How Marketing Differentiates Products

5

LEARNING OBJECTIVE

Marketing All the activities necessary for a firm to sell a product to a consumer.

Brand Management

Brand Management The actions of a firm intended to maintain the differentiation of a product over time.


What makes a firm successful

What Makes a Firm Successful?

6

LEARNING OBJECTIVE

12 - 7

What Makes a Firm Successful?


Monopolistic competition the competitive model in a more realistic setting

  • Brand management

  • Marketing

  • Monopolistic Competition


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