Important similarities between firms in a monopolistically competitive market and a monopoly are which of the following?:
(i) they both face downward-sloping demand curves
(ii) they are both regulated by the government
(iii) firms in both markets can make economic profits in the long run

Question

Quizplus · Accepted Answer

Both firms in a monopolistically competitive market and a monopoly face downward-sloping demand curves, meaning they can set their prices above marginal cost. However, monopolistically competitive firms cannot make economic profits in the long run due to free entry and exit, and not all monopolies are regulated by the government.

Important Similarities Between Firms in a Monopolistically Competitive Market and a Monopoly