Consider the monopolistically competitive market structure w

Consider the monopolistically competitive market structure, which has some features of a perfectly competitive market and some features of a Complete the following table by indicating whether each attribute characterizes a perfectly competitive market, a monopolistically competitive market, both, or neither. Check all that apply. Attributes Perfectly Competitive Market Monopolistically Competitive Market Few sellers Freedom of entry and exit Price equals average total cost in the long run Price is equal to marginal cost

Solution

Price > Marginal cost in a monopolistically competitive market (MR = MC)

and there are many sellers in both types of market (freedom of entry and exit), economic profit in the long run is zero (P = ATC)

Attributes	Perfectly Competitive Market	Monopolistically Competitive Market
Few sellers	Neither
Freedom of entry and exit	Both
Price equals average total cost in the long run	Both
Price equal to marginal cost	Yes	No