explain the relationship between the market price and a monopolistically competitive firm’s marginal revenue, be able to find the profit-maximizing output and price
explain the relationship between the market price and a monopolistically competitive firm’s marginal revenue, be able to find the profit-maximizing output and price
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter10: Monopolistic Competition And Oligoply
Section: Chapter Questions
Problem 1SQP
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Question
explain the relationship between the market
Expert Solution
Step 1
A monopolistic competition is a type of market in which there are many producers who sell differentiated products (in terms of quality ,branding etc.). For example: Clothing Industry, Restaurant Industry etc.
The main features of Monopolistic competition are:
- There are too many buyers and too many sellers.
- The firms produce differentiated products (in terms of branding, packing,qaulity etc)
- Perfect knowledge to both consumers and producers about the market and technology.
- Freedom of exit and entry to the firms.
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