Question

Question 45 10 pts A. What are the key differences between Monopolistic Competition and Oligopoly? (5 marks) B. What are the typical Efficiency Outcomes of an Oligopolistic industry? (5 marks)

Answer 1

I can give answer of part A

Answer Difference between monopolistic competition and oligopoly

Monopolistic competition- It is a market where number of buyers and sellers are in market and purchase heterogeneous products with close substitutes. Here , major aim of firms is to increase the sale by attracting customers. Therefore, product differentiation is followed in monopolistic competition. In the=is market, there is always normal profit in the long run.

Oligopoly- It is market with fewer sellers and many buyers. Here sellers compete with each other to have high prices. If firms of oligopoly collude with each other , then take the form of monopoly and can charge high prices from customers. There is restriction of entry of new firms.