Eco 201 Milestone One Guidelines

IntroductionAs a consultant providing microeconomic analysis for 3M Company, the purpose of this paper is to examine the behavioral patterns of firms in a monopolistic market structure.By definition, a monopolistic competition market structure combines elements of monopoly and competitive markets. In a monopolistic competitive market, firms have freedom of entry and exit, and can differentiate their products. For this reason, firms in a monopolistic competition have an inelastic demand curve and can set prices. However, because of freedom of entry, if firms in a monopolistic competition are enjoying supernormal profits, more firms will be encouraged to enter the market leading to normal profits CITATION Man20 \l 7177 (Mankiw, 2020). 3M Company operates in a monopolistic competition because it produces branded products. In monopolistically competitive markets, firms make normal profit in the long run, yet 3M Company, which we may describe as monopolistically competitive, is very profitable over the long run. The current research intends to test the assumption of normal long run profits in monopolistic competition.3M Company (stock symbol: MMM) began 1902 as the Minnesota Mining and Manufacturing Company, from its humble beginning the company has grown into a global conglomerate.Five entrepreneurs from Minnesota with the objective of harvesting mineral