Week 5 Discussion

Choose one question to answer:
1. Give examples of industries that are monopolistically competitive. Find the news articles, books which explain these examples.
2.What is “monopolistic” about monopolistic competition? What is “competitive” about a monopolistically competitive market? Please explain.
3. Suppose that A Cleaner World invents a new type of laundry detergent that has an ingredient that stops stains from setting into clothes. If the laundry detergent market is monopolistically competitive, explain what will happen to the price of its product in the short run. What will happen in the long run?
4. “If the amount of product differentiation in a monopolistically competitive industry is very small, the outcome in that market will not be very different than if it were a perfectly competitive industry.” Please explain.
5. Can a monopolistically competitive firm producing a good with lots of very close substitutes earn large positive profits in the long run? Please explain.

Leave a Reply

Your email address will not be published. Required fields are marked *