EBK PRINCIPLES OF MICROECONOMICS (SECON
2nd Edition
ISBN: 9780393616149
Author: Mateer
Publisher: W.W.NORTON+CO. (CC)
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Question
Chapter 12, Problem 1QR
To determine
The necessity of product differentiation on
Expert Solution & Answer
Explanation of Solution
The monopolistic competition is a market structure that is characterized by the entry of a large number of firms into the market, no barriers to entry and exit, product differentiation, and some control over the market
Monopolistically competitive firms can differentiate their product by their location, style, product features, advertising, quality, and quantity. Differentiating product in a way that shows the locality by customers causes a decrease in the elasticity of products, an increase in their market power, and an increase in the price of goods in the market.
Economics Concept Introduction
Monopolistic competition: Monopolistic competition is an imperfect market structure that has a relatively large number of buyers and sellers in the market, differentiated products, some control over the market price, and a few barriers to entry and exit.
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Wolfgang is a typical producer in a perfectly
competitive piano industry (i.e., all other producers of
pianos face the same costs as Wolfgang). The
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0
1
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2
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3
240
3000
4
400
4000
Chapter 12 Solutions
EBK PRINCIPLES OF MICROECONOMICS (SECON
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