Discuss some products and markets that are good examples of Monopolistic Competition. Like the market structure of perfect competition, monopolistic competition assumes inexpensive entry into the market and thus many small sellers. Like the market structure of monopoly, monopolistic competition assumes a downward sloping demand curve. This is because, unlike the identical products found in perfectly competitive markets, the products in monopolistically competitive markets are differentiated and not perfect substitutes for one another. Therefore each monopolistically competitive seller has some degree of brand loyalty and would not lose all of its customers if it slightly raised its price above that of its competition. While not facing perfectly elastic, or horizontal, demand, the monopolistically competitive firm still faces a more elastic demand than the monopolist, whose product has no substitutes. Give two examples of markets where there are many choices among products, yet we all tend to have some brand loyalty for our favorite products? In other words, we do not perceive all firms' products as perfect substitutes for each other.
Discuss some products and markets that are good examples of
Like the market structure of perfect competition, monopolistic competition assumes inexpensive entry into the market and thus many small sellers. Like the market structure of
Give two examples of markets where there are many choices among products, yet we all tend to have some brand loyalty for our favorite products?
In other words, we do not perceive all firms' products as perfect substitutes for each other.
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