Evaluate the model of Monopolistic Competition. What are the key assumptions? Do you think this model is useful for explaining many "real world" businesses? Why or why not? How does it compare in this regard to the models of perfect competition and monopoly?

Evaluate the model of Monopolistic Competition. What are the key assumptions? Do you think this model is useful for explaining many "real world" businesses? Why or why not? How does it compare in this regard to the models of perfect competition and monopoly?

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter10: Monopolistic Competition And Oligopoly

Section: Chapter Questions

Problem 1QFR

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Question

Evaluate the model of Monopolistic Competition.

What are the key assumptions?

Do you think this model is useful for explaining many "real world" businesses?

Why or why not?

How does it compare in this regard to the models of perfect competition and monopoly?

Definition Definition Form of market structure in which there are a large number of sellers of a particular product, with each seller selling somewhat differentiated but close substitutes to the product sold by other sellers. Features of monopolistic competition include: Large number of buyers and sellers Differentiated products Free entry and exit of the firms in the market

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