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Chapter 25: Q. 25.1- Learning Objectives (page 559)

Discuss the key characteristics of a monopolistically competitive industry.

Short Answer

Expert verified

Monopoly really does have four distinct features:

  1. A single firm that sells all of an industry's output,
  2. Entry and Exit is a one-of-a-kind product.
  3. exit restrictions, and, more often than not,
  4. Specialized data about manufacturing techniques that the other prospective producers do not have.

Step by step solution

01

Introduction.

  • A market where numerous firms supply comparable (but not optimal) replacements for their services and commodities is described as price discrimination.
  • In a monopolistic competitive market, entrance and exit barriers are minimal, and one institution's policies have little impact on many of its own competitors.
02

Explanation.

Monopolistically market markets have the following elements: there's many producers and consumers, and no company has full influence on market price.

03

Key characteristics of a monopolistically competitive industry. 

Non-price differences among both competitors' products are perceived.

  • There are numerous manufacturers and purchasers.
  • Products with minor variations.
  • The entry and exit barriers are low.
  • There is the chance of supernormal profits in the temporary.

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