I am confused on the differences in how these types of firms make profits. How is a monopolistically competitive firm like a monopoly, and how is it like perfect competition?
Why doesn't the monopolistically competitive firm, enjoy long-run economic profits like the oligopoly and monopoly since they all 3 have downward-sloping demand curves?
Can the monopolistically competitive firm achieve long-run economic profits, and if so or not, why?
>How is a monopolistically competitive firm like a monopoly?
Like a monopoly it has a downward-sloping demand curve, meaning that it has some power to set its own price. A monopolistically competitive firm's market power derives from the differentiation of its product from its competitors'.
>and how is it like ...
Solution Summary
This solution explains the differences between the 4 types of market: monopolistic competition, monopoly, oligopoly, and perfect competition. It explains why a monopolistic competitor cannot enjoy long-run economic profits like a monopolist or an oligopolist.
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Monopoly, Oligopoly, Perfect competition, and Monopolistic competition
What is a market structure?
Define and discuss in detail the differences between a monopoly, an oligopoly, perfect competition and monopolistic competition.
Give real-life examples of each market structure.
... In the monopolistic competition many firms are selling a differentiated ... It is like monopoly in that the firm ... sellers, it is like perfect competition in that ...
... manner due to the lack of competition for that ... incentive to be innovative as those in monopolistic competitions. ... of market structure as a monopoly, except that ...
... Pure (Perfect) Monopoly Monopolistic Competition Oligopoly Competition McDonald's - hamburgers McDonald's falls in this category because there is a significant ...
