Faceless Too Subject Assumptions and comparative statics Topic Monopolistic Competition Key Words Retailing, markets, sales, web sites, Internet, vendors, cost, products, staff, buildings News Story Online retailing is growing fast in markets such as airline tickets, toys, food and computers. Two thousand secure web sites capable of electronic transactions are added to the Internet each month. The benefits of online retailing include wider markets and longer hours. The cost of an electronic operation is lower because fewer staff and no buildings are needed.
Online shopping is also more convenient.
One observer noted that it is fast companies beating slow ones, not necessarily large companies beating small ones. One example is a Brooklyn clothing store, Stacia New York, which can now sell all around the country. Draw a diagram of the monopolistically-competitive equilibrium of Stacia New York. Include the demand, marginal revenue, average total cost, and marginal cost curves. Mark the equilibrium price, output and profit.