MedicoreFilms — Free Hugs

My students favorite clip when discussing product differentiation is this clip from MedicoreFilms where a guy offers Deluxe Hugs for $2 more. One of his opening lines best illustrates the concept of monopolistic competition:

Deluxe guy: How’s businesses?

Free guy: Mine are free, this isn’t a business.

Deluxe guy: Different people want different stuff, so it’s cool.

Businesses can differentiate their products by quality, style, location, etc. The guy offering deluxe hugs is trying to fill a portion of the market from people willing to pay more for “better” hugs.

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