Question

Describe the characteristics of a monopolistic market .

Answer 1

The monopolistic market has the following characteristics:-

Product differentiation = The monopolistic market is defined by product differentiation as the product produced by the sellers are differentiated in terms of quality and features.

Free entry= the market is characterized by free entry and exit as the loss-making firms can freely exit and the profit-making firms will ensure free entry of new firms to the market

Zero profit = In the long run, the firms in the market earn zero profit due to the monopoly nature, they can set their own price but in the long run, the firms end up making zero economic profits as in the long run, the price = ATC

Many sellers = there are many sellers in the market that produce differentiated goods to a large number of consumers.