On the one hand, the inefficiency of monopolistic competition is that it ____. On the other hand, a positive result is ____.
A)produces too many different products; zero economic profit in the long run
B)fails to minimize total cost; product variety
C)results in a deadweight loss; product variety
D)produces at the point at which marginal revenue equals marginal cost; economic profit
E)fails to maximize profit; normal profit

Question

Quizplus · Accepted Answer

Monopolistic competition results in a deadweight loss due to the fact that firms produce at a quantity where marginal revenue is less than marginal cost. However, a positive result of monopolistic competition is that it allows for product variety, which gives consumers more options and allows for firms to differentiate themselves from competitors.

On the One Hand, the Inefficiency of Monopolistic Competition Is