5. Which of the following statements is FALSE about monopolistic competition and

Question

5. Which of the following statements is FALSE about monopolistic competition and monopoly?

A.Monopolistic competitors have an incentive to differentiate their products, but monopolies do not have this incentive.

B. Monopolies can earn positive economic profit in the long run, while monopolistically competitive firms do not.

C. Monopolistic competitors have the same amount of influence over the price of their products as monopolists.

D. They both produce less output than would be productively efficient.

Explanation / Answer

Answer.) C. Monopolistic competitors have the same amount of influence over the price of their products as monopolists.

Monopolists have more market power than monopolistically competitive firm its because products produced by a monopolistically competitive firm is a differentiated products but monopoly produce products that have no substitutes.

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