Question

2) Compare the characteristics of the monopolistically competitive structure to the monopoly structure? What is the result of the differences in the long run? Why?

Answer 1

1.In Monopoly, there is only one seller but in monopolistic competition there a large number of sellers

2 In Monopoly the price is decided by the seller but in monopolistic competition the price is decided by the group of sellers.

3.In Monopoly there are barrier to entry and exit but i monopolistic there only few barrier to entry and exit in the market .

B.In the long run the monopolistic competition is having only few barrier .There will be so many new firms that will enter in the market and this will cause the profit to be low and in the long run the economic profit becomes zero but in case of monopoly in the long run the profit is positive