1. Monopolistic competition features
    1. Significant numbers of sellers in a highly competitive market

    2. Differentiated products

    3. Sales promotion and advertising

    4. Easy entry of new firms in the long run
  2. Monopolistic competition
    A market situation in which a large number of firms produce similar but not identical products. Entry into the industry is relatively easy.
  3. Product differentiation
    The distinguishing of products by brand name, color, and other minor attributes. Product differentiation occurs in other than perfectly competitive markets in which products are, in theory, homogeneous, such as wheat or corn.
  4. Brand Names and Advertising
    Firms use trademarks—words, symbols, and logos—to distinguish their product brands from goods or services sold by other firms.Consumers associate these trademarks with the firms’ products.
  5. Direct marketing
    Advertising targeted at specific consumers,typically in the form of postal mailings,telephone calls, or e-mail messages.
  6. Mass marketing
    Advertising intended to reach as many consumers as possible, typically through television, newspaper, radio, or magazine ads.
  7. Interactive marketing
    Advertising that permits a consumer to followup directly by searching for more information and placing direct product orders.
  8. Search good
    A product with characteristics that enable an individual to evaluate the product’s quality in advance of a purchase.

    Clothing, movies, and music

    Informational Advertising
  9. Experience good
    A product that an individual must consume before the product’s quality can be established.

    Soft drinks, restaurant meals,and haircutting services

    Persuasive advertising
  10. Credence good
    A product with qualities that consumers lack the expertise to assess without assistance.

    Products such as pharmaceuticals and services such as health careand legal advice

    Both Informational Advertising & Informational Advertising
  11. Informational Advertising
    Advertising that emphasizes transmitting knowledge about the features of a product.
  12. Persuasive advertising
    Advertising that is intended to induce a consumer to purchase a particular product and discover a previously unknown taste for the item.
  13. Information product
    An item that is produced using information intensive inputs at a relatively high fixed cost but distributed for sale at a relatively low marginal cost.

    Good examples are computer games, computer operating systems, digital music and videos, educational and training software, electronic books and encyclopedias,
  14. Short-run economies of operation
    A distinguishing characteristic of an information product arising from declining short-run average total cost as more units of the product are sold.
Card Set