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- Subject
- Monopoly & Competitioneconomics-mcqs › monopoly-competition
- Published
- 30 May 2019
- Last updated
- 28 May 2026
Which statement accurately describes the key similarities and differences between a monopoly and monopolistic competition?
Multiple choice question for Monopoly & Competition. Select an option, then review the explanation below.
Explanation
Monopolists can sustain economic profits over time due to barriers to entry, whereas firms in monopolistic competition face no such barriers, leading to zero economic profits in the long run. Both market structures involve downward-sloping demand curves, but only monopolies maintain long-run profits. Additionally, neither necessarily produces at the efficient scale.
More Monopoly & Competition MCQs
Practice related questions from the same subject.
- 1.Which of the following is NOT commonly cited as a criticism of advertising and brand names?
- 2.Which type of company is most likely to allocate a significant portion of its sales revenue to advertising?
- 3.Why does the term "competition" apply to the market structure known as "monopolistic competition"?
- 4.In monopolistic competition, inefficiency arises because the price exceeds marginal cost, leading to some valuable units not being produced due to what reason?
- 5.Among the following types of businesses, which one is least motivated to invest in advertising?