Last day of lecture. After today, Test 3, then a review day, then the final.Lots of discussion of the final and the reviews for it.
In a monopolisticly competitive market, there are a features common to both monopolistic markets and perfectly competitive markets.
- Many firms
- Products are neccessarily differentiated.
- Firms have some power to set prices
- Demand curve will be downward sloping, though not as steeply as for a monopoly
- The marginal revenue curve will be below the average revenue curve, as usual.
- Excess profit is possible for a firm in the short period.
- Incurring a loss is also possible in the short period
- Neither profit nor loss is theoretically possible in the long period.