1
Q
What is monopolistic competition?
A
A form of imperfect competition it’s a middleground between monopoly and perfect competition and combines elements of each
2
Q
What does product differentiation mean?
A
That businesses have some control over their products, it implies that firms have some price-setting power
3
Q
What are the key assumptions of monopolistic competition?
A
-Many buyers and seller
-Perfect information
-Low barriers to entry/exit
-Products slightly differentiated
-Firms aim to maximise profit
-Consumers aim to maximise utility
-Firms have littlr price-making power
