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What is Understanding Monopolistic Competition about?
Monopolistic competition is characterized by many sellers in an industry, each with differentiated products and small market shares. Entry and exit of sellers is relatively easy. In the short-run, firms have elastic but not perfectly elastic demand curves due to product differentiation. In the long-run, firms operate at suboptimal scale and earn only normal profits as entry and exit of competitors pushes prices towards average total costs.
- Author
- DaniyalChattha
- Language
- EN