Monopoly and perfect competition are polar opposites. In the former, there is only one producer of a good. Barriers to entry are high. In the latter, there are many producers of an identical product. There are no barriers to entry. Most markets are not perfectly competitive, nor are they monopolized. We categorize everything in between these polar extremes as "imperfect competition". There are two major models of imperfect competition – monopolistic competition and oligopoly. Questions for discussion:

1. What are the characteristics of a monopolistically competitive market?

2. Why might gasoline retailing fit this model?

3. Does every gas station in your community charge the same price? Why or why not?

4. For those in rural areas: If you drive a considerable distance, can you find cheaper gas?