{"id":6493,"date":"2018-02-05T15:37:01","date_gmt":"2018-02-05T15:37:01","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/wm-microeconomics\/chapter\/outcome-monopolistically-competitive-industries\/"},"modified":"2024-04-25T22:09:36","modified_gmt":"2024-04-25T22:09:36","slug":"introduction-to-monopolistically-competitive-industries","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/wm-microeconomics\/chapter\/introduction-to-monopolistically-competitive-industries\/","title":{"raw":"Introduction to Monopolistically Competitive Industries","rendered":"Introduction to Monopolistically Competitive Industries"},"content":{"raw":"<h2>What you'll learn to do: explain the characteristics of monopolistic competition and how it differs from other market structures<\/h2>\r\n<a href=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images-archive-read-only\/wp-content\/uploads\/sites\/1295\/2015\/06\/03182217\/42711932_63275a104a_z.jpg\"><img class=\"wp-image-2259 aligncenter\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/2042\/2018\/02\/05153700\/42711932_63275a104a_z.jpg\" alt=\"Close up image of curly fries and a fast-food chicken sandwich.\" width=\"437\" height=\"291\" \/><\/a>\r\n\r\nMonopolistically competitive industries are those that contain more than a few firms, each of which offers a similar but not identical product. Take fast food, for example. The fast food market is quite competitive, and yet each firm has a monopoly in its own product. Some customers have a preference for McDonald\u2019s over Burger King. Some have a preference for Dominoes over Pizza Hut. These preferences give monopolistically competitive firms market power, which they can exploit to earn positive economic profits.\r\n\r\nConsider the following questions:\r\n<ul>\r\n \t<li>Why do gas stations charge different prices for a gallon of gasoline?<\/li>\r\n \t<li>What determines how far apart the prices of Colgate and Crest toothpaste can be?<\/li>\r\n \t<li>Why did fast food restaurants start offering salads?<\/li>\r\n \t<li>Why are fast food chicken sandwich prices different from burger prices?<\/li>\r\n \t<li>Why did McDonalds come up with the Big Mac sandwich?<\/li>\r\n<\/ul>","rendered":"<h2>What you&#8217;ll learn to do: explain the characteristics of monopolistic competition and how it differs from other market structures<\/h2>\n<p><a href=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images-archive-read-only\/wp-content\/uploads\/sites\/1295\/2015\/06\/03182217\/42711932_63275a104a_z.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-2259 aligncenter\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/2042\/2018\/02\/05153700\/42711932_63275a104a_z.jpg\" alt=\"Close up image of curly fries and a fast-food chicken sandwich.\" width=\"437\" height=\"291\" \/><\/a><\/p>\n<p>Monopolistically competitive industries are those that contain more than a few firms, each of which offers a similar but not identical product. Take fast food, for example. The fast food market is quite competitive, and yet each firm has a monopoly in its own product. Some customers have a preference for McDonald\u2019s over Burger King. Some have a preference for Dominoes over Pizza Hut. These preferences give monopolistically competitive firms market power, which they can exploit to earn positive economic profits.<\/p>\n<p>Consider the following questions:<\/p>\n<ul>\n<li>Why do gas stations charge different prices for a gallon of gasoline?<\/li>\n<li>What determines how far apart the prices of Colgate and Crest toothpaste can be?<\/li>\n<li>Why did fast food restaurants start offering salads?<\/li>\n<li>Why are fast food chicken sandwich prices different from burger prices?<\/li>\n<li>Why did McDonalds come up with the Big Mac sandwich?<\/li>\n<\/ul>\n\n\t\t\t <section class=\"citations-section\" role=\"contentinfo\">\n\t\t\t <h3>Candela Citations<\/h3>\n\t\t\t\t\t <div>\n\t\t\t\t\t\t <div id=\"citation-list-6493\">\n\t\t\t\t\t\t\t <div class=\"licensing\"><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Original<\/div><ul class=\"citation-list\"><li><strong>Authored by<\/strong>: Steven Greenlaw and Lumen Learning. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><\/ul><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Shared previously<\/div><ul class=\"citation-list\"><li>Fast Food is the best. <strong>Authored by<\/strong>: ebruli. <strong>Provided by<\/strong>: Flickr. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/www.flickr.com\/photos\/mrbling\/42711932\/in\/photolist-4LULC-cGwaPU-aCpjG1-7HvXFk-bk44T8-e7f6bp-pbaqmL-eQnMvd-ecGwf4-7HzSWG-6G7wk3-di6ztC-8Wd4oT-Cqq6y-fEsR1K-rcE8tQ-6M9WPf-o87PN-2BZze-6KQj8x-rcGkMy-bC473f-8fjV72-fEKGVW-9nRf3Y-8vYFBf-pKeANE-6NzxzZ-5ryBYV-6K5nSZ-rScFJX-6KPRTG-6F6SF1-rgam52-7HzSPE-8Wgtd-636RVh-dfuafd-pdM61f-6F2HWB-AmEYe-8D7Axw-omhMvn-6UAgFP-7K7eCz-b3vqyM-ksapsv-bR5dbD-9ZaA1-7HzT55\">https:\/\/www.flickr.com\/photos\/mrbling\/42711932\/in\/photolist-4LULC-cGwaPU-aCpjG1-7HvXFk-bk44T8-e7f6bp-pbaqmL-eQnMvd-ecGwf4-7HzSWG-6G7wk3-di6ztC-8Wd4oT-Cqq6y-fEsR1K-rcE8tQ-6M9WPf-o87PN-2BZze-6KQj8x-rcGkMy-bC473f-8fjV72-fEKGVW-9nRf3Y-8vYFBf-pKeANE-6NzxzZ-5ryBYV-6K5nSZ-rScFJX-6KPRTG-6F6SF1-rgam52-7HzSPE-8Wgtd-636RVh-dfuafd-pdM61f-6F2HWB-AmEYe-8D7Axw-omhMvn-6UAgFP-7K7eCz-b3vqyM-ksapsv-bR5dbD-9ZaA1-7HzT55<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><\/ul><\/div>\n\t\t\t\t\t\t <\/div>\n\t\t\t\t\t <\/div>\n\t\t\t <\/section>","protected":false},"author":29,"menu_order":2,"template":"","meta":{"_candela_citation":"[{\"type\":\"original\",\"description\":\"\",\"author\":\"Steven Greenlaw and Lumen Learning\",\"organization\":\"\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"},{\"type\":\"cc\",\"description\":\"Fast Food is the 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