Question

Complete the following table indicating whether each of these three industry types do or do not have each of these features and outcomes (just yes/no in each cell is fine): Features and outcomes Perfect competition Monopolistic competition Monopoly Firms are economically "large" Product differentiation Control over its price Barriers to entry Earns profit in the long run Produces efficient scale in the long run Allocatively efficient Use this table to answer these questions: 1. What feature(s) of a market leads to long-run profits? 2. What feature(s) of a market lead to allocatively efficient outcomes?

Answer 1

Feature	Perfect Competition	Monopolistic Competition	Monopoly
Firm's are large	No	No	yes
Product Differentiation	No	yes	no
Control over price	no	Yes	yes
Entry barriers	no	no	yes
Long run profit	no	no	yes
Effecient scale in long run	yes	no	no
Allocatively effecient	yes	no	no

1) features for long run profits

•) when firm has full control over price

• when ther are entry barriers

• when firms are large

• when products are not differentiated

•

2) allocatively effecient Allocations

When •) no entry barriers

• no control over price

• products are homogeneous

• firms are small in size