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    Discuss the characteristics of monopolistic competition.. With real-world examples..
    Does anyone know any real world examples?
    Are Apple, Google and Microsoft monopolistic competition?

    If you were writing an essay, how would you lay it out?
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    1. Define key terms;
    2. Explain concepts, referring to the question in every paragraph;
    3. No more than 3 diagrams in the main body; no explanation of diagrams = no marks;
    4. Evaluate
    5. Conclude

    Think about what monopolistic competition means... and try to think of any markets which satisfy the assumptions yourself. I'll give you some ideas but you should probably try to think of others for your own benefit. Look monopolistic competition up in your textbook or on the internet if you don't understand my example.

    The market for cereal and restaurants; think about the degree of concentration in these markets, how many firms there are, what kind of products they produce relative to each other and so on.
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    (Original post by Chelle-belle)
    1. Define key terms;
    2. Explain concepts, referring to the question in every paragraph;
    3. No more than 3 diagrams in the main body; no explanation of diagrams = no marks;
    4. Evaluate
    5. Conclude

    Think about what monopolistic competition means... and try to think of any markets which satisfy the assumptions yourself. I'll give you some ideas but you should probably try to think of others for your own benefit. Look monopolistic competition up in your textbook or on the internet if you don't understand my example.

    The market for cereal and restaurants; think about the degree of concentration in these markets, how many firms there are, what kind of products they produce relative to each other and so on.
    Thanks Chelle-belle you seem very well informed!
    Which microeconomic analysis or theory do you think would be the best to use to tackle this question?
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    My teacher says that firms in monopolistic competition earns normal profit in both short and long run. But the books says firms can earn abnormal profit or loss in short run and normal profit in long run.
    So now I am confused and will be grateful if the confusion is cleared.
    Thanks.
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    I'm not really well informed, but I think this is the structure most A level students use and it is a strong and simple one, so I see no viable reason why you shouldn't use it at uni or for anything else. And Google does solve 75% of my problems.

    To Noble:In the least amount of words I can do this in:
    - Many firms with some market power each
    - No barriers to entry/exit
    - Products are differentiated but are close substitutes

    The combination of the points means in the short run due to their small price setting power it is possible to either earn supernormal profit, normal profit or a loss depending on your firm.

    In the long run, firms are able to enter/exit, so the adjustment process works like the perfect competition one:
    - If there are profits earned in the market, firms will want to enter, pushing down the price and therefore profit to normal profit
    - If there are losses, firms will leave, raising prices and therefore profit to normal profit

    Your teacher's tongue probably slipped! :P



    Edit, OP: Not sure what you are asking in reference to microeconomic analysis or theory. Definition and explanation of key terms should mostly constitute of microeconomic theory (eg. you cannot define and explain what monopolistic competition is without use of theory). Assuming microeconomic analysis is just normal analysis of markets/points/what have you, i don't know how it would be possible to answer the question without it.

    PS, one thing I would definitely advise on somewhere in your essay is to define the market. Each of these firms have a wide range of products which may or may not relate to each other. From your question it is not clear what you are comparing, apart from naming three firms. For example, Google has a search engine whilst Apple does not. Microsoft and Google own IM services - I don't know if Apple does. It doesn't make sense to ask, "Are Apple/Google/Microsoft monopolistic competition?" Apple/google/Microsoft are firms. Monopolistic competition refers to a market structure - so you would ask, "Are Apple/Google/Microsoft in monopolistic competition within the ____________ market/industry?"
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    (Original post by xhfsk)
    Discuss the characteristics of monopolistic competition.. With real-world examples..
    Does anyone know any real world examples?
    Are Apple, Google and Microsoft monopolistic competition?

    If you were writing an essay, how would you lay it out?
    Real world examples are hairdressers, pubs, and any other small firms.
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    (Original post by Chelle-belle)

    In wikipedia it says ''In monopolistic competition firms can behave like monopolies in the short-run, including using market power to generate profit. In the long-run, other firms enter the market and the benefits of differentiation decrease with competition; the market becomes more like perfect competition where firms cannot gain economic profit.''

    What is an example of this in real-life?
    Restaurants are a form of monopolistic competition, how does the above apply to restaurants?
 
 
 
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