微观部分英文课件princ ch16.pdfVIP

In this chapter, look for the answers to these questions: ▪ What market structures li ween perfect competition and monopoly, and what are their characteristics? ▪ How do monopolistically competitive firms choose price and ty? Do they earn economic profit? ▪ In what ways does monopolistic competition affect society’s welfare? ▪ What are the social costs and benefits of advertising? 1 Introduction: Between Monopoly and Competition Two extremes ▪ Perfect competition: many firms, identical products ▪ Monopoly: one firm In between these extremes: imperfect competition ▪ Oligopoly: only a few sellers offer similar or identical products. ▪ Monopolistic competition: many firms sell similar but not identical products. MONOPOLISTIC COMPETITION 2 Characteristics Examples of Monopolistic Competition Characteristics: ▪ Many sellers ▪ Product differentiation ▪ entry and exit Examples: ▪ apartments ▪ books ▪ bottled water ▪ clothing ▪ fast food ▪ night clubs MONOPOLISTIC COMPETITION 3 Comparing Perfect Monop. Competition Perfect Monopolistic competition competition number of sellers many many entry/exit yes yes long-run econ. profits zero zero the products firms sell identical differentiated firm has market power? none, price-taker yes