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?
Can the monopolistically competitive firm achieve long-run economic profits, and if so or not, why?© BrainMass Inc. brainmass.com October 25, 2018, 9:43 am ad1c9bdddf
>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 ...
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.
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.