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Quick macro question

lopppy · 2011-05-04 19:53:50

Hey, have an international economics exam tomorrow, currently studying monopolistic competition. Pasting from lecture slides.. "A firm in a monopolistically competitive industry is expected To sell more as total sales in the industry increase and as prices charged by rivals increase. To sell less as the number of firms in…

04-05-2011 7:53pm

#1
lopppy

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Hey, have an international economics exam tomorrow, currently studying monopolistic competition. Pasting from lecture slides..

"A firm in a monopolistically competitive industry is expected

To sell more as total sales in the industry increase and as prices charged by rivals increase.
To sell less as the number of firms in the industry decreases and as its price increases"

Why does it sell less as the number of firms decrease? Restricting output to increase price?

Tagged:

macro economics

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Comments

#2 18-05-2011 5:52am

meryem

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To gain more profits from lesser investment and resources. A perfect monopolistic approach.

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