Which statement concerning monopolistic competition is false?

A) Long-run equilibrium under monopolistic competition and pure competition both entail zero economic profits for firms.
B) Monopolistic competition is likely to result in a greater variety of product brands than pure competition.
C) The monopolistically competitive demand curve is more elastic than the demand curve facing a monopoly.
D) Long-run equilibrium in monopolistic competition does not entail any economic inefficiency because of easy entry and exit.

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Prabhat Menon · Accepted Answer

Final Answer : D, Explanation :  In monopolistic competition, long-run equilibrium can involve economic inefficiencies, such as excess capacity and non-price competition, which can lead to higher average costs than in pure competition. This is contrary to the assertion in option D that there is no economic inefficiency due to easy entry and exit.

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