Monopolistic competition

Question 1

monopolistic competition

Answer 1

A market structure in which firms have many competitors, but each one sells a slightly different product

Question 2

Features

Answer 2

Large number of buyers and sellers, no barriers to entry and exit in the long run, firms produce non-homogenous goods, producers have some control over price, info widely spread not perfect

Question 3

Efficiency in the short run

Answer 3

Both the means and incentive for dynamic efficiency in short run, statically inefficient in the short run

Question 4

Efficiency in the long run

Answer 4

no means for dynamic efficiency, statically inefficient

Question 5

Advantages

Answer 5

No barriers to entry in the long run, differentiation gives consumers more choice and utility, more info means consumers don’t need to spend to find info (shoe leather costs)