Question: How does monopolistic competition differ from pure competition? From pure monopoly? Explain fully what product differentiation may involve. Explain how the entry of firms into

  1. How does monopolistic competition differ from pure competition? From pure monopoly? Explain fully what product differentiation may involve. Explain how the entry of firms into its industry affects the demand curve facing a monopolistic competitor and its economic profit. L012.1
  2. Suppose that a monopolistically competitive firm pays for an ad campaign that backfires, causing many consumers to dislike the firm's product. In which direction does demand shift, right or left? What happens to the slope and to the elasticity of demand? What happens to the firm's pricing power?

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