Monopolistic Competition & Oliogopoly

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  1. Characteristics of Monopolistic Competition?
    • Many buyers & many sellers
    • Diferentiated products
    • Easy entry/exit of firms
    • Price Seekers
  2. Characteristics of an Oliogopoly?
    • Many buyers & few large sellers
    • No easy entry ino business
    • Both differentiated and homogeneous goods
    • Price Seekers
    • EP > 0 in long run
  3. Product Differentiation
    Process of creating real or apparent differences between goods and services
  4. Non-price Competition
    Advertising, packaging, product development, better quality, and better services
  5. Mutual Interdependence
    Action by one firm may cause a reaction on the part of other firms
  6. Price Leadership
    Occurs when a dominant firm in an industry raises or lowers its prices, and other firms follow suit
  7. Cartel
    Formal agreement among firms to set prices and output quotas
  8. Imperfect Competition
    A market structure between the extremes of perfect competition and monopoly
  9. Kinked Demand Curve
    Faces an oligopolist that assumes rivals will match a price decrease, but ignores a price increase
  10. Can an oliogopolist earn EP in the long-run?
    Yes, as long as there are only a few firms producing that product or service
Card Set
Monopolistic Competition & Oliogopoly
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