Monopolistic competition

Question 1

true or false

monopolistic comp has normal profit in the long run

Answer 1

true

Question 2

of sellers?
Standard or differentiated products?
barriers to entry?
non price comp?

Answer 2

• large number of sellers, small market shares, no collusion (illegal), independent action
• differentiated products
• easy entry and exit
• need for advertising/nonprice competition

Question 3

what does the firms demand curve look like?

Answer 3

highly elastic

Question 4

is it efficient or inefficient?

Answer 4

inefficient