Question

In monopolistic competition there is an under-allocation of resources at the profit-maximizing level of output, which means that rev: 05_15_2018 Multiple Choice ATC is not equal to MC. price is greater than minimum ATC. price is greater than MC. price is greater than MR.

Answer 1

Answer:

price is greater than MC.

Explanation:

A monopoly is a market structure which is typically characterized by a single-seller who sells a unique product in the market by dominance. This ultimately implies that, it is a market structure wherein the seller has no competitor because he is solely responsible for the sale of unique products without close substitutes. Any individual that deals with the sales of unique products in a monopolistic market is generally referred to as a monopolist.

For example, a public power company is an example of a monopoly because they serve as the only source of power utility provider to the general public in a society.

Monopolistic competition can be defined as the market structure which comprises of elements of competitive markets (having many competitors) and monopoly.

In monopolistic competition there is an under-allocation of resources at the profit-maximizing level of output, which means that price is greater than marginal cost (MC).