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Bell Ringer #15 – 11/1/10

Explore the concept of non-price competition and its impact on brand choices. This article discusses the factors that influence consumers' purchasing decisions in a perfect competition market and the role of product differentiation in monopolistic competition. It also includes homework questions for further understanding.

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Bell Ringer #15 – 11/1/10

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  1. Bell Ringer #15 – 11/1/10 • To “differentiate” products, sellers use “nonprice competition” • Considering products you listed on Friday, come up with 3 “nonprice” factors that affect which brand you purchase.

  2. Perfect Competition • Perfect Competition occurs when buyers (consumers) and sellers (producers) each compete directly under the laws of supply and demand. • No one buyer or seller controls the prices.

  3. Perfect Competition exists when… • Buyers and sellers act independently • Sellers offer identical products • Buyers are well informed about products • Sellers can enter or exit the market easily

  4. A perfect competition market usually contains lots of businesses selling identical products

  5. MONOPOLY • When sellers have non-identical products, competition is no longer based only on price. • A unique product can lead to a single-firm market. • A monopoly occurs when one seller controls all production of a good or service.

  6. Monopolistic Competition • No market is perfectly competitive • Monopolistic competition occurs when sellers offer different, rather than identical, products. • Each firm seeks to have monopoly-like power by selling a unique product.

  7. Product Differentiation • Sellers in monopolistic competition attempt to convince buyers to show that their product is different • Goal is show “superiority” over other product choices.

  8. Homework • Read Ch 6, Sn 1 • Questions 1, 2, & 3 on page 122

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