Monopolistic Competition: An interdependent group exercise

My students were able to grasp the basics of monopolistic competition using this introductory, collaborative activity which covers content including:

-characteristics of monopolistic competition

-the effects of competition and low barriers to entry on profit

-the effects of advertisement

Students work in small groups to complete one part of a shared exploration of the monopolistic competition. Three groups are different firms producing pizza, while the fourth group is pizza consumers. After completing handouts, the groups collaborate to discuss the characteristics of the pizza market including attempts to differentiate their product, the importance of advertising, and differences between short run and long run.