Chapter 25 Monopolistic Competition To Print from an Internet browser, set type size to Smaller by choosing View, Text Size and Smaller, and choose File and Print.You may also need to set the margins to 0.25 inches.      B. Our Current Events Internet Library has an interesting economics section.

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Editors Note: Part II Product and Factor Markets should be read as an introduction to this chapter, especially by those using  
McConnell Economics Books or involved with Test Prep, CLEP, or AP Economics projects.

I. Introduction
    A. A monopolistically competitive market exists when a substantially large number of firms serve a market with relatively
         differentiated products.
    B. An example would be merchandising firms of all types selling products such as shoes, shirts, TV's, groceries, etc.
    C. Product differentiation
        1.Some feel it is real and important while others feel it is artificial and unimportant.
        2. Examples
            a. Non-price competition
               1. Product quality
               2. Product image (Branding)
               3. Customer service
               4. Store environment and image
           b. Condition for sale (location)
               1. Mail order
               2. Home delivery using the internet
               3. Bidding on the internet
   C. Some control over price exists and demand tends to be more elastic than with monopoly or oligopoly markets.

II. Monopolistic competition

III. Economic analysis of monopolistic competition
      A. P is high compared to pure competition (P> MR = MC)
      B. Quantity will be restricted causing ATC to be higher than that indicated by the curve's lowest point.
      C. Tends to be more competitive than monopoly and oligopoly.
      D. Some believe economic profit tends toward zero as the number of firms adjust to varying profit levels.
      E. Econ Concepts in 60 Seconds Video on Monopolistic Competition in the Long-Run

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