ECON 1000 Lecture Notes - Lecture 8: Externality, False Advertising, Monopolistic Competition

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Each firm has a monopoly over the product it makes, but many other firms make similar products that compete for the same customers. Described by the following: many sellers: lots of firms competing for their customers, product differentiation: all products produced are slightly different. Rather than being a price taker the firms face downward d. c: free entry/exit: can come or leave without restrictions. Number of firms in the market adjust until economic profits. These markets include are driven to 0: dvds, computer games, restaurants, piano lessons, cookies, clothing, etc. competition"s equilibrium society. 1st consider the decisions faced by an individual firm. 2nd look at what happens in the long run as firms enter and exit. 3rd compare the equilibrium for monopolistic competition to the perfect. 4th consider whether the outcome in a m. c market is desirable for the whole. The monopolistic competitive firm in the short run.

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