#AP Microeconomics: Imperfect Competition - Your Last-Minute Guide

Hey there! Let's get you prepped for the exam. We're diving into imperfect competition, a key area where real-world markets get a little messy. Think of this as your cheat sheet for acing those questions. Let's go!

#Introduction to Imperfect Competition

Remember perfect competition? Lots of firms, easy entry, and everyone's a price taker? Well, things change in imperfect competition. Here, one or more of those perfect competition rules get broken. This leads to some interesting market dynamics, like firms having more control over prices and the appearance of deadweight loss. Let's break it down:

- **Key Types:** - [Monopoly](#monopoly): One firm dominates. - [Oligopoly](#oligopoly): Few large firms dominate. - [Monopolistic Competition](#monopolistic-competition): Many firms with differentiated products.

#Characteristics of Imperfectly Competitive Firms

These firms have some common traits that set them apart from perfectly competitive markets:

• Fewer, Larger Firms: Not a ton of small players; instead, a few big ones or even just one.
• Price Makers: They have the power to influence prices, unlike price takers in perfect competition. 💡
• High Barriers to Entry: It's tough for new firms to join the party, which keeps competition down.
• Long-Run Profits: Firms can earn economic profits in the long run (except in monopolistic competition, where they break even).
• Differentiated Products: Products are not identical; they have unique features or branding.
• Non-Price Competition: Firms compete using advertising and branding instead of just price.
• Inefficient in the Long Run: They don't produce at the lowest possible cost, leading to inefficiency.
• Demand > Marginal Revenue (MR): To sell more, they must lower the price, so MR decreases faster than demand.