In monopolistic competition,there is:
A) allocative efficiency.
B) productive efficiency.
C) both allocative and productive efficiency.
D) neither allocative nor productive efficiency.

Question

Quizplus · Accepted Answer

In monopolistic competition, firms have some degree of market power and are able to set prices above marginal cost, leading to a loss of allocative efficiency. Additionally, because firms have differentiated products, there is likely to be excess capacity and a failure to achieve productive efficiency. Therefore, there is neither allocative nor productive efficiency in monopolistic competition.

In Monopolistic Competition,there Is