Monopolistic Competition

Monopolistic competition is a market structure that is characterized by (1) many sellers; (2) differentiated products; (3) nonprice competition; (4) relatively easy entry and exit. It has similarities to both pure competition and oligopoly. Monopolistic competition is similar to pure competition in the sense that there are many sellers and no strong barriers to entry. Firms can enter and leave markets on a regular basis and, indeed, do so. The amount of money required to go into business is relatively small, and there are few government regulations restricting those wishing to enter a market. In addition, each seller controls such a small share of the market that each believes that his or her actions will bring no reactions from competitors. Unlike pure competition, however, monopolistic competition is characterized by product differentiation and nonprice competition. The latter involves efforts to persuade consumers to buy a particular product or reasons other than price. In fact, product differentiation and nonprice competition are the most important characteristics that distinguish monopolistic competition from pure competition.

PRACTICAL ASSIGNMENT 5

Translate from English into Ukrainian paying attention to the Infinitive.

1. То run a business is to plan its activities and to determine all operations necessary at each step.

2. To control an economy is the same as to intervene in it.

3. To develop new information technologies is of prime importance for those countries that wish to lead in the world economy.

4. To stay in the tobacco market is not an easy task for Ukrainian manufactures.

5. In order to earn income, we have to work.

6. Firms and individuals spend their income to consume and to invest.

7. To analyze the labour market, an economist should first explain how people allocate their time to production.

8. With an increase in the price of one factor of production, to produce a given output the firm starts using a technology economizing on the factor whose price has risen.

9. To calculate profit-maximizing output and the corresponding quantities of the factors demanded, we have to calculate the total cost for all output levels.

10. The price of the good became high enough for society to stop choosing it for everyday use.

11. As a rule, resources in industrialized countries are used effectively enough to make a good base for economic growth.

12. The imports tariffs were not raised high enough to decrease imports.

13. Statistics depends too much on limited information resources to avoid (уникати) compromises.

14. The economic growth is too slow now to expect a rapid increase in demand and supply.

15. In developing countries, labour efficiency is too low in agriculture to hope for an increase in food supply in the near future.

2. Read and translate the text Factors of production: Capital and Labour.