Compare perfect competition and monopolistic competition. In what ...

[kaid0807]

Compare perfect competition and monopolistic competition. In what ways are they similar? In what ways are they different?
 
  What will be an ideal response?

Question 2

If additional units of a good could be produced at an increasing opportunity cost, the production possibilities frontier would be linear.
 
  Indicate whether the statement is true or false

[jgranad15]

Answer to Question 1

Because of freedom of entry, economic profits are zero in the long run both for perfect competition and monopolistic competition. But firms in monopolistic competition charge a price greater than marginal cost. This implies that monopolistically competitive industries do not produce the efficient level of output. Also, firms in monopolistic competition do not realize all the economies of scale available. In addition, another difference is that firms in monopolistic competition produce differentiated products. Firms in perfect competition only produce homogenous goods.

Answer to Question 2

FALSE

[kaid0807]

Correct answers!

[jgranad15]

Great! Please up vote