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Harry Bindloss

Monopolistic competition: Occurs when there are many firms in the industry, each selling
a slightly differentiated product. One firm's products are not perfect substitutes for
another's so this means that the firms operating in the market are not price takers.


Large number of relatively small…

Page 2

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Harry Bindloss

In the short run a firm in monopolistic competition will aim to profit-maximise and will
therefore produce where marginal cost is equal to marginal revenue. This may mean (as
here) that they are able to make supernormal profit. The amount of supernormal profit on
each unit is the…

Page 3

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Harry Bindloss

Advantages of Monopolistic Competition

Informed Consumers - Monopolistic competition requires consumers to become more
informed about the products and services available in the market. Businesses entering a
monopolistic competition market often engage in advertising to make their presence
known and differentiate themselves from other local businesses offering the…




This is 3 pages clearly explaining about monopolistic competition and explaining the diagrams. Good for students who need a remionder on this topic.

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