Monopolistic competitor and Monopoly


Is answer A wrong?
According to reading 13 Eco subjects, monopoly has the highest barriers to entry right?
And other answer are all wrong?
And also is pure monopoly is monopolists ?

Thank you.

Hello @Tu_Nguyenanh!

First, I think it is appropriate to outline the differences between these market structures:

  • Monopolistic Competition: many sellers, differentiated product (unique feature, brand), low barriers to entry, some pricing power
  • Pure Monopoly: one seller, unique product, very high barriers to entry, strong pricing power

Regarding the possible answers:
(A) Yes, monopolistic competition has low barriers to entry (fairly high level of competitivity), while pure monopoly has very high barriers
(B) Monopolistic competitors can maximize profits (Marginal Revenue = Marginal Cost)
(C) Monopolistic competitors are not price takers. In this market, the degree with which a firm can influence the price depends on the success of product differentiation, so there is some pricing power.

In this topic, I recommed you to read a little bit about Schumpeter’s ideas on innovation and perfect competition, it might be useful :+1:

About the phrasing of the question: monopolist = pure monoply firm

Hope it helps. Thank you and best regards

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Thank you so much.