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Pure competition in the short run, Monopolistic Competition, Four Market…
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Monopolistic Competition
Small Market Shares a firm has a small percentage of the total market and limited control over market price.
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Easy Entry and Exit compared to pure competition industries, entry to the monopolistic industry is easy.
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Advertising
Differentiation would be useless if the public was not made aware of these differences. Therefor advertising is used.
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The Firms Demand Curve is highly, but not perfectly, elastic because monopolistic competition has fewer rivals and no perfect product substitutes due to differentiation.
In the short run, these firms maximize profit (or minimize loss) the same way a purely competitive industry does.
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In monopolistic competition, neither productive or allocative efficiency occurs in the long run. To produce the profit-maximizing output, ATC would be higher than optimal from societies perspective and productive efficiency would not be achieves. Profit-maximizing price also exceeds marginal cost causing an under-allocation of resources.
Excess capacity is the gap between minimum-ATC output and profit-maximizing output. This gap is usually caused when firms are producing less than the minimum-ATC causing plant and equipment to be underused.
Four Market Modules
Pure Monopoly one firm is the sole seller producing an unique product. Additional firms are blocked from entering the industry.
Pure Competition large number of firms producing a standardized product. Entry or exit to the industry is easy.
Oligopoly few firms producing standardized or different products. Each firm is effected by the decisions of its rivals.
Monopolistic Competition large number of firms producing different products. Entry or exit to the industry is easy.