4. â??Competition in quality and service may be just as effective as price competition in giving buyers more for their money.â? Do you agree? Why? Explain why monopolistically competitive firms frequently prefer nonprice competition to price competition.
9. Why is there so much advertising in monopolistic competition and oligopoly? How does such advertising help consumers and promote efficiency? Why might it be excessive at times?
11. What firm dominates the beer industry? What demand and supply factors have contributed to â??fewnessâ? in the industry?
4. If a monopolistically competitive firm lowers its price to compete with other firms, it runs the risk that those other firms will do the same. Then, the whole industry loses profits without gaining customers. Since its products are slightly differentiated, it is better off trying to produce a product that has more utility. Then, the consumer will have greater ...
This solution exemplifies demand and supply factors.