Question 1
Monopolies, oligopolies, and monopolistic competitive industries all
◦ earn positive profits in the long run.
◦ have market power.
◦ are completely unconstrained in their pricing.
◦ raise price and quantity over what would occur in perfect competition in order to maximize their profits.
Question 2
Imperfect competition and market power
◦ are major sources of inefficiency.
◦ result in higher output than in perfect competition.
◦ are always the result of product differentiation.
◦ result from diseconomies of scale.