Monopolistic comp

Question 1

When does monopolistic comp. exist

Answer 1

Where there are many competing producers and they are selling products that are differentiated from each other. products are substitutes for eachother but have different brands etc. eg. nike and adidas

Question 2

In the short run

Answer 2

A firm can make abnormal profits because of the differentiation between the products, however in the longer term, new firms can enter the industry attracted by these profits, so abnormal profits will ne competed away

Question 3

Features of monopolistic comp.

Answer 3

-many producers/ consumers and no individual firm can control the market price (price makers)
- consumers believe that there are differences in the products being offered
- few barriers to entry/exit
- producers have some control over the prices they charge in the short run

Question 4

The market structure is a form of

Answer 4

imperfect competition.

Question 5

producers gain more market control by

Answer 5

Applying for patents or trademarks