Chapter 16

Chapter 16 discussed monopolistic competition, and given that it builds off of our previous knowledge, it wasn’t an awful chapter. Monopolistic competitive markets have aspects for both a monopoly and perfectly competitive market, where there are multiple firms, with different categories. This can fall under books and movies, which there are many publishers and works, but each is different from each other. A monopolistic competitive market still allows free entry into a market, as well as exit, and wants to maximize profit. At profit maximization, marginal revenue is equal to marginal cost. It is similar to a monopoly in that is a price maker, the price must be above marginal cost, doesn’t necessarily produce welfare-maximizing output. It is similar to a perfectly competitive market in that it has many firms, has free entry in the long run, but cannot earn economic profits in the long run. The graphs seems fairly easily to understand, especially after the last chapter, nothing too new or surprising. I think at this point it is just remembering and understanding which traits the market shares with competitive and monopoly. The rest of the chapter discussed advertisements and brand names, their benefits and critiques, and how that affects the market.