ECON 2000 Chapter : Econ Chapter 12
Document Summary
How market outcomes are affected by this market structure. The long run consequences of different market structures. A more precise way to distinguish monopolistic competition is to examine concentration ration. Concentration ratio- the proportion of total industry output produced by the largest firms (usually the 4 largest) Typically a monopolistic competition will have a lower concentration. Low concentration ratios are common in monopolistic competition: market power. There is a monopoly aspect to a monopolistic competition. An example would be a company being able to change the price of output monopoly dimension of monopolistic competition. Some producers in monopolistic competition are large enough to have some market power. Market power- the ability to alter the market price of a good or service. A monopolistically competition firm confronts a downward- slopping demand curve for its output: independent production decisions. Modest changes in the output or price of any single firm will have no perceptible influence on the sales of any other firm.
