MicroEconomics Midterm 2
The quantity that minimizes average total cost
Efficient scale
A situation where firms can enter the market without restriction
Free entry
A market structure in which many firms sell products that are similar but not identical
Monopolistic competition
Many sellers: This is in common with competition. Product differentiation: This is in common with monopoly—each firm's product is slightly different, so each firm is a price maker and faces a downward-sloping demand for its product. Free entry and exit: This is in common with competition—firms can enter or exit without restriction, so economic profits are driven to zero.
Monopolistic competition has the following characteristics:
A market structure in which only a few sellers offer similar or identical products
Oligopoly
