BackCharacteristics of Monopolistic Competition definitions
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1/14BackSkip to main contentBackMonopolistic Competition
A market structure where many firms sell similar but not identical products, each having some control over pricing. Differentiated Product
An item that is similar to others in the market but possesses unique features, allowing firms to attract specific customers. Market Power
The ability of a firm to influence the price of its product due to its unique characteristics or branding. Price Maker
A firm that can set its own prices to some extent, rather than accepting a market-determined price. Demand Curve
A graphical representation showing the relationship between the price of a product and the quantity consumers are willing to buy. Downward Sloping Demand Curve
A situation where increasing sales requires lowering the price, reflecting the law of demand in monopolistic competition. Perfect Competition
A market structure with many firms selling identical products, where no single firm can influence the price. Horizontal Demand Curve
A flat line indicating that firms can sell any quantity at the market price, typical in perfect competition. Marginal Revenue
The additional income a firm receives from selling one more unit, which decreases as output increases in monopolistic competition. Barriers to Entry
Obstacles that prevent new firms from entering a market; these are low in monopolistic competition. Substitute Goods
Products that can replace each other in consumption, increasing competition among firms with differentiated offerings. Average Revenue
The revenue earned per unit sold, which equals the price in both monopolistic and perfect competition. Equilibrium Price
The market price where supply and demand intersect, setting the price in perfect competition. Free Entry and Exit
A condition where firms can join or leave the market without significant restrictions, promoting competition.
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