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    Market power

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    List the characteristics of firms in each type of market: perfect competition, monopolistic competition, and monopoly. Give an example of each type of firm in our current economy. What are some ways a monopolistically competitive firm can maintain or increase its market power?

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    Solution Preview

    Perfectly competitive firm:
    1. The market has a large number of small sellers.
    2. The firms sell a homogeneous product.
    3. It is easy to enter and leave the industry.
    Example: A dairy farm

    Monopolistically competitive firm:
    1. The market has a large number of small sellers.
    2. The firms sell a differentiated ...

    Solution Summary

    This solution lists the characteristics of perfectly competitive, monopolistically competitive, and monopolistic firms. It also lists the ways that a monopolistically competitive firm can maintain or increase its market power.

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