Principles of Microeconomics / Unit 17 MIC 1629 short lesson, about 20 seconds
Monopolistic Competition, Restated
Captions available
The idea
Many firms, easy entry, differentiated products. Short run, the firm is a monopolist on its own demand; entry shifts it left until it touches average cost, zero profit, below minimum average cost: excess capacity, the price of variety.
In practice
The shop settles at thirty a day when fifty is cheapest.
Where people slip
Zero profit does not make it efficient; price still exceeds marginal cost.
Your place on the trail
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Unlocks
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