monopolistic

• What is the term for a market with many buyers and sellers?

  Perfect competition
• What characterizes a monopoly firm?

  It has no close substitutes
• What is the term for a market structure with many firms competing?

  Monopolistic competition
• What happens to supernormal profits in the long run?

  They are eroded by new entrants
• How does demand elasticity affect market entry?

  Elastic demand encourages new firms to enter
• What are the characteristics of monopolistic competition?

  • Many buyers and sellers
  • Differentiated products
  • Free entry and exit
  • Some control over prices
• What is the relationship between price and demand in elastic markets?

  Price increases lead to a significant drop in demand
• What does it mean if a market is not productive or allocative efficient?

  Resources are not optimally allocated
• What is the impact of economies of scale on market structure?

  They can lead to monopolistic behavior
• What is the effect of consumer innovation on market dynamics?

  It can disrupt existing market structures
• What is the term for the maximum output level in a market?

  Market equilibrium
• How do premium brands influence consumer perception?

  They create a perception of higher quality
• What is the significance of signaling in markets?

  It indicates potential profitability to new entrants
• What are the implications of close substitutes in a market?

  • Increased competition
  • Price sensitivity among consumers
  • Potential for market entry by new firms
• What is the term for the price elasticity of demand?

  Price elasticity of demand (PED)
• What happens to demand when a firm raises its prices in an elastic market?

  Demand decreases significantly
• How does a dominant firm behave in a market?

  It influences prices and market conditions
• What is the outcome of a market with no influence from dominant firms?

  Perfect competition exists
• What is the role of marketing in monopolistic competition?

  It helps differentiate products
• What is the relationship between supernormal profits and market entry?

  Supernormal profits attract new entrants
• What is the effect of market power on pricing strategies?

  It allows firms to set higher prices
• What does it mean for a firm to have market power?

  It can influence prices and output levels
• How do dominant firms respond to competition?

  They may lower prices to maintain market share
• What is the significance of the term 'close substitutes' in economics?

  They affect consumer choices and demand
• What is the impact of advertising on monopolistic competition?

  It enhances product differentiation
• How does the presence of supernormal profits affect market dynamics?

  It signals potential for new entrants