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Chapter 1: Q.5 (page 9)

What is the relationship between product

differentiation and monopolistic competition?

Short Answer

Expert verified

In both product differentiation and monopolistic competition differentiated or separate products to deal with.

Step by step solution

01

Step 1. Product differentiation and monopolistic competition. 

A market system in which a high number of vendors sell distinct items is known as monopolistic competition.

02

Step 2. Explanation

Monopolisitc competition is a market structure that is a combination of a monopoly and perfect comeptition. Differentiation of products causes monopolisitc competition to differ from perfect competition. It the element of product differentiation that makes this market a blend of monopoly and perfect comeptition.

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Most popular questions from this chapter

In the Keynesian framework, which of the following events might cause a recession? Which might cause inflation? Sketch AD/AS diagrams to illustrate your answers.

a. A large increase in the price of the homes people own.

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d. The interest rate rises.

e. The good imported from a major trading partner become much less expensive.

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