Asked by
Anshul Takshak
on Oct 26, 2024
Verified
Since a monopolistic competitor charges a price higher than marginal cost,there is a deadweight loss associated with monopolistic competition.
Deadweight Loss
The decrease in economic performance that happens when a good or service fails to meet or cannot attain its optimal distribution point.
Marginal Cost
The cost of producing one additional unit of a good or service, considering all variable resources used in production.
Monopolistic Competition
A type of imperfect competition such that many producers sell products that are differentiated from one another (e.g., by branding or quality) and hence are not perfect substitutes.
- Examine the impact of monopolistic competition on economic efficiency and deadweight loss.
Verified Answer
IO
Learning Objectives
- Examine the impact of monopolistic competition on economic efficiency and deadweight loss.