Question

which of the following descriptions fit both monopolies and monopolistic competitors, and which descriptions only fit one of these? descriptions (6 items) (drag and drop into the appropriate area below) makes unique goods without close substitutes does not produce at minimum average total cost in the long run has zero economic profit in the long runcharges a price above marginal cost of production has high barriers to entry/exit low barriers to entry lead to market entry when profits exist.

Answer 1

Both monopolies and monopolistic competitors can make unique goods without close substitutes, have zero economic profit in the long run, and can have low barriers to entry.

Step-by-step explanation:

Monopolies and Monopolistic Competitors

• Makes unique goods without close substitutes: Both monopolies and monopolistic competitors can make unique goods without close substitutes.
• Does not produce at minimum average total cost in the long run: Monopolies do not produce at minimum ATC in the long run, but monopolistic competitors may or may not produce at minimum ATC.
• Has zero economic profit in the long run: Both monopolies and monopolistic competitors can have zero economic profit in the long run.
• Charges a price above marginal cost of production: Monopolies charge a price above marginal cost, while monopolistic competitors may or may not charge a price above marginal cost.
• Has high barriers to entry/exit: Monopolies have high barriers to entry/exit, while monopolistic competitors have low barriers to entry.
• Low barriers to entry lead to market entry when profits exist: Monopolistic competitors have low barriers to entry, which can lead to market entry when profits exist.