7) Although the long run equilibrium of a monopolistically competitive markets involves zero economic profit like perfect competition, the outcome is deemed to be inefficient. Why is that the case? Are there desirable characteristics of monopolistic competition that potentially balance some of the inefficiencies?

Principles of Economics, 7th Edition (MindTap Course List)
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Chapter16: Monopolistic Competition
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7) Although the long run equilibrium of a monopolistically competitive markets involves zero economic
profit like perfect competition, the outcome is deemed to be inefficient. Why is that the case? Are there
desirable characteristics of monopolistic competition that potentially balance some of the inefficiencies?
Transcribed Image Text:7) Although the long run equilibrium of a monopolistically competitive markets involves zero economic profit like perfect competition, the outcome is deemed to be inefficient. Why is that the case? Are there desirable characteristics of monopolistic competition that potentially balance some of the inefficiencies?
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