Pure competition results in a lower price but identical output level compared to those in monopolistic competition.

Question

Quizplus · Accepted Answer

In pure competition, firms produce at a more efficient level (where price equals marginal cost) compared to monopolistic competition, where firms have some power to set prices above marginal costs due to product differentiation, leading to potentially higher prices and lower output levels in monopolistic competition compared to pure competition.

Pure Competition Results in a Lower Price but Identical Output