Mary competes in a monopolistically competitive market. Suddenly, 5 new firms enter the market, causing her perceived demand curve to shift. The following tables show her original and new demand curves and her cost information. after the new firms enter the market there would be a decrease by 10
Generally, there are many producers competing against one another in monopolistic competition, but their goods are distinct from one another, and as a result, they are not ideal substitutes for one another.
This type of imperfect competition is known as oligopolistic competition.
Monopolistic competition occurs when a large number of companies offer products or services that compete with one another and are comparable but not exact substitutes for one another.
In an industry that is monopolistically competitive, the barriers to entry are low, and the decisions that any one company makes do not directly affect the other firms in the industry.
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Mary competes in a monopolistically competitive market. Suddenly, 5 new firms enter the market, causing her perceived demand curve to shift. The following tables show her original and new demand curves and her cost information. Assume that Mary can only choose from the quantities of output given in the table. By how much will the quantity that she produces change after the new firms enter the market?
Original Demand Curve
Price Quantity TC
30 0 $130
25 10 $140
20 20 $260
15 30 $450
10 40 $660
New Demand Curve
Price Quantity TC
25 0 $130
20 10 $140
15 20 $260
10 30 $450
5 40 $660
