Explain the differences between monopolistically market and competitive market.
Explanation of Solution
The monopolistic competition is a market structure that is characterized by the entry of a large number of firms into the market, no barriers to entry and exit product differentiation, and some control over
If a monopolistically competitive firm earns the economic profit in the short run, then it will attract the new firms and decrease the individual firms’ demand until all the firms earn a normal profit in the market.
Monopolistic competition: Monopolistic competition is an imperfect market structure that has a relatively large number of buyers and sellers in the market, differentiated products, some control over the market price, and a few barriers of entry and exit.
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