Which of the following are important differences between monopolistically competitive markets and monopoly markets?
(i) one market is efficient while the other entrails dead-weight losses
(ii) upward sloping marginal costs is only seen in one of the markets
(iii) long-run profits are possible in one but not the other

Question

Quizplus · Accepted Answer

Monopolistically competitive markets tend to have firms earning zero economic profit in the long run due to free entry and exit, whereas monopolies can sustain long-run profits due to barriers to entry. Both market types can have upward sloping marginal costs, and both can have inefficiencies and dead-weight losses, making options (i) and (ii) incorrect.

Which of the Following Are Important Differences Between Monopolistically Competitive