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Monopolistic comp

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Monopolistic comp

  1. 1. Short Quiz 1. Why would it be bad if you were a firm in a perfect competition market? 2. Why do consumers like perfect competition market? 3. Under what condition should a firm shut down rather than exit the market?
  2. 2. Economic Competition • 4 basic market types: – Perfect Competition – Monopolistic Competition – Oligopoly – Monopoly • Measures price/nonprice competition, and product differentiation
  3. 3. You sell…. • Your boss gives you $100,000 to develop a plan gain some pricing power. What will you suggest the company spend money on?
  4. 4. You sell…. • New type of pencil and patent • New colors • New erasers • Advertise • Support gov’t regulation to keep competition out • Sign exclusive deal with Office Max, TUSD, College Board, etc
  5. 5. Monopolistic Competition Market • Features: • Many firms • Different or perceived different products (brand names too) • Product “differentiation” Other Examples? • Some pricing power “price makers” • Can be easy to start new firm • Can be easy to close down firm • Not fully informed consumers
  6. 6. Perfect Monopolistic Competition Competition Oligopoly Monopoly
  7. 7. On your white boards: What type of market? • Blank DVD’s
  8. 8. What type of market? • Mexican Food
  9. 9. What type of market?
  10. 10. What type of market? • Hair cut
  11. 11. What type of market? • Electric Power
  12. 12. What type of market? • Notebook paper
  13. 13. What type of market? • Oil in Mexico
  14. 14. What type of market? • Hotels
  15. 15. Assignments 1. Activity 28 (packet) 2. Mankiw: pg 327 #5, 7, 8 3. Chapter 14: 2 questions re: reading & #2-4 pg 297 4. Activity #? 5. Article #4
  16. 16. Mankiw Pages 346 •#3, 5, 7, 8

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