Answer to Question #288332 in Microeconomics for Swazi bear

Question

Use diagrams to explain the difference in efficiency in the long run position for a competitive market structure and a monopolistic market structure

Answer 1

The principal difference between a competitive market structure and a monopolistic market structure is that in the case of perfect competition the firms are price takers, whereas in monopolistic competition the firms are price makers.

In the long-run, a monopolistically competitive market is inefficient, because it achieves neither allocative nor productive efficiency. But perfectly competitive market is efficient in the long run.