This changes the industry from a perfectly competitive one to a monopoly. Even though the technology and input prices remain the same, consumers should expect real changes in the pineapple business. Monopolistic competition is a market structure characterized by many small firms selling a homogeneous product. A monopolist competitor's demand curve is relatively more inelastic than a monopolist's demand curve. Monopolistic competitive firms in long-run equilibrium will generally find that they are earning economic profits.
Advertising serves no useful economic function or purpose.
Multiple Choice 9. To sell more units, the monopolist must increase the price on all units sold. As the monopolist expands output, its average total cost will decline. When a firm has a monopoly, consumers have no choice other than to pay the price set by the monopolist. When the monopolist reduces price in order to sell more units, it must lower the price of some units that could otherwise have been sold at a higher price.