Monopolistic Competition ■ Questions 3)What is the degree of monopoly power? 4)What is the benefit of product diversity? Chapter 12 Slide 16
Chapter 12 Slide 16 Monopolistic Competition n Questions 3) What is the degree of monopoly power? 4) What is the benefit of product diversity?
Monopolistic Competition in the market for colas and coffee The markets for soft drinks and coffee lustrate the characteristics of monopolistic competition Chapter 12 Slide 17
Chapter 12 Slide 17 Monopolistic Competition in the Market for Colas and Coffee n The markets for soft drinks and coffee illustrate the characteristics of monopolistic competition
Elasticities of demand for Brands of colas and coffee Brand Elasticity of Demand Colas Royal Crown 2.4 Coke 5.2to-5.7 Ground Coffee: Hills Brothers 7.1 Maxwe‖ House 8.9 Chase and Sanborn -5.6 Chapter 12 Slide 18
Chapter 12 Slide 18 Elasticities of Demand for Brands of Colas and Coffee Colas: Royal Crown -2.4 Coke -5.2 to -5.7 Ground Coffee: Hills Brothers -7.1 Maxwell House -8.9 Chase and Sanborn -5.6 Brand Elasticity of Demand
Elasticities of demand for Brands of colas and coffee ■ Questions 1)Why is the demand for Royal Crown more price inelastic than for Coke 2)Is there much monopoly power in these two markets? 3)Define the relationship between elasticity and monopoly power Chapter 12 Slide 19
Chapter 12 Slide 19 n Questions 1) Why is the demand for Royal Crown more price inelastic than for Coke? 2) Is there much monopoly power in these two markets? 3) Define the relationship between elasticity and monopoly power. Elasticities of Demand for Brands of Colas and Coffee
Oligopoly ■ Characteristics e Small number of firms o Product differentiation may or may not exist ● Barriers to entry Chapter 12 Slide 20
Chapter 12 Slide 20 Oligopoly n Characteristics l Small number of firms l Product differentiation may or may not exist l Barriers to entry