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Using the example above, other food vendors are allowed to open outlets in the shopping mall if they thought it would be profitable to do so. In addition, existing firms can and will close if they find they are not covering their cost in the long run. Monopolistic competition, then, differs from the other three market structures...
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In addition, existing firms can and will close if they find they are not covering their cost in the long run. Monopolistic competition, then, differs from the other three market structures. It’s not the same as perfect competition: firms have some power to set prices. It’s not pure monopoly: firms face some competition...
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