Monopolistic Competition

1
MonopolisticCompetition

• Chapter 7 Section 3

2
Indiana Academic Standards for Economics

• Standard 3.4
• Identify the basic characteristics of the four
  market structures perfect competition, monopoly,
  oligopoly, and monopolistic competition.

3
Markets
1
2
3
4
Perfect Competition
Name
Monopoly
A. Buyers Sellers
Many
One Seller
B. Type of Good
Identical
Unique
C. Enter Exit
Easy
Hard
Agriculture Stock Market
Utilities
Example
4
Objectives

• What are the characteristics of monopolistic
  competition?
• What are some examples of monopolistic
  competition?
• Are monopolistic competitors price takers or
  price searchers?

5
Question

• What is the term for a combination of
  contradictory or incongruous words?
• OXYMORON
• Example
• Jumbo Shrimp
• Does Monopolistic Competition resemble an
  oxymoron?

6

• List a commercial or product that conveys the
  idea that the product has NO CLOSE SUBSTITUTES.
• You got the right one, baby.
• Diet Pepsi
• Its the real thing.
• Coca-Cola
• Attempt to become a monopoly

7
3 Characteristics ofMonopolistic Competition

• 1. MANY Sellers Buyers
• 2. Firms Produce Sell Slightly DIFFERENT
  Products
• 3. Entry into Exit from the Market are EASY

8
Examples of Monopolistic Competition

• Clothes
• No patent on jeans
• Levi v Wrangler
• Fast Foods
• No patent on hamburgers
• McDonalds v Burger King

9

• Do monopolistic competitors have any control over
  price?
• Yes
• Characteristic 2
• Firms produce slightly different products
• Therefore, PRICE SEARCHERS

10
Assessment

• What are the characteristics of monopolistic
  competition?
• What are some examples of monopolistic
  competition?
• Are monopolistic competitors price takers or
  price searchers?