Answer to Question #129753 in Microeconomics for Jesicca

Question

Identify 5 examples of industries operation under conditions of monopolistic competition and outline any of their salient features to justify your selections

Answer 1

Examples of industries operating under conditions of monopolistic competition are;

1. Restaurants
2. Hairdressers
3. Clothing industry
4. Television programmes
5. Transportation industry

Features of monopolistic competition industry include;

1. There are many firms.
2. There is freedom of entry and exit.
3. Firms produce differentiated goods.
4. Firms make normal profits in the long run and may make super-normal profits in the short run.
5. Firms are allocatively and productively inefficient.