Which of the following is TRUE?
A) Monopolistic competition and perfect competition are both inefficient.
B) Monopolistic competition is efficient because of product differentiation.
C) The inefficiency of monopolistic competition may be a small price to pay for the wide range of product choices it offers.
D) The inefficiency of monopolistic competition is a result of advertising expenses.

Question

Quizplus · Accepted Answer

Monopolistic competition is inefficient due to factors like excess capacity and markup over marginal cost, but it provides a variety of product choices, which can be seen as a benefit that offsets some inefficiencies.

Which of the Following Is TRUE