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Why are there so many different
kinds of hamburgers?
Wikipedia has a list of over 30
different types of hamburgers [https://en.wikipedia.org/wiki/List_of_hamburgers].
Why are there so many? Why do different restaurants continue
to invent their own "new" hamburger?
ANSWER: In this lesson you will learn
that firms gain market power through product
differentiation - making their product a little
different from their competitors. This allows them to
charge a higher price and increase their profits. BUT, other
restaurants can always copy the new hamburger recipe
stealing away those profits. Welcome to Monopolistic
Competition: part "monopoly" because of product
differentiation and part "pure competition" because of low
bariers to entry.
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