What are the advantages and disadvantages of resource allocation under monopolistic competition compared to perfect competition?
The disadvantage is that monopolistically competitive firms do not operate at minimum long-run average cost, whereas competitive firms do. The advantage is that "variety is the spice of life" and there is variety in monopolistic competition but not in perfect competition, where all producers make an identical product.
You might also like to view...
If a country passes a labor law limiting the number of hours of work per week, GDP would ________ and leisure would ________
A) decrease; increase B) decrease; decrease C) increase; increase D) increase; decrease
The slope of the short-run Phillips curve is consistent with:
a. the long-run trade-off between the unemployment rate and inflation. b. the long-run trade-off between inflation and GDP. c. the short-run trade-off between the money supply and interest rates. d. the short-run trade-off between business productivity and wage contracts. e. the short-run trade-off between the unemployment rate and inflation.