Economy, asked by anurag22831, 1 year ago

Similarity between monopoly and monopolistic competition

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Answered by Anonymous
6
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\underline{Similarities}
(1) Both in monopoly and monopolistic competition the point of equilibrium is at the equality of MC and MR and the MC curve cuts the MR curve from below.

(2) In both, the demand curve (AR) slopes downward to the right and the corresponding marginal revenue curve is below it.

(3) In both situations the equilibrium point is below the price line (AR).

(4) In both, there is excess capacity. In other words, the demand curve (AR) is not tangent to the long-run average costs curve at its minimum point.

(5) In both market situations, the producer is a price-maker. He can raise or lower the price.



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