Monopolistic Competition and its Characteristics
¨ Large number of sellers.
¨ Sell differentiated products with substitutes.
¨ Firms are allowed to enter and exit freely.
¨ Imperfect market conditions prevail.
AR (demand) and MR Curves of Monopolistic Competition
Firms in a monopolistic Competitive industry tend to have elastic downward sloping AR and MR Curves indicating that they have some control over price but not much.
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