Explore BrainMass
Share

Distinctions between perfect and monopolistic competition

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

"In the long run, there is no difference between monopolistic competition and perfect competition." True, false, or ambiguous? Discuss this statement with respect to the following:
a. The price charged to consumers - true
b. The average total cost of production - false
c. The efficiency of the market outcome - ambiguous
d. The typical firm's profit in the long run hide problem- ture

© BrainMass Inc. brainmass.com October 24, 2018, 10:27 pm ad1c9bdddf
https://brainmass.com/economics/perfect-competition/distinctions-between-perfect-and-monopolistic-competition-160152

Solution Preview

In both cases, there are many firms and the price received by every firm is equal to the average total cost of production. The main difference between these two market forms in the long run is product differentiation. Monopolistic competition is not efficient in terms of resource allocation or in production. It provides in exchange a variety of products. In many cases, consumers have ...

Solution Summary

Distinctions between perfect and monopolistic competition in terms of efficiency and social cost.

$2.19
See Also This Related BrainMass Solution

Monopoly and oligopoly

1. Why is it that firms can earn profits in the long run in monopoly and oligopoly but not in monopolistic competition and perfect competition?

2, What can firms do in monopolistic competition or perfect competition to make the short run last as long as possible since they can only make profits in the short run? Have you observed any firms employ such tactics? Can you give some examples?

View Full Posting Details