3rd Place- 2012 AP Econ Video- Rolling in the Green (Monopolistic Competition)

The video discusses the dynamics of monopolistic competition using hair salons as an example. It explains how salons differentiate themselves to attract customers and compete for loyalty. In the short run, they act like monopolies, making profits, but in the long run, they face excess capacity and adjust production to where marginal revenue equals marginal cost. The video also highlights the ease of market entry and exit, and the ongoing rivalry among competitors.

What are the implications of excess capacity in the hair salon industry?

Discuss the significance of price control in the context of the hair salons.