Which statement concerning monopolistic competition is false?
A) Long-run equilibrium under monopolistic competition is achieved where economic profits are zero.
B) Monopolistic competition is likely to result in a greater variety of product brands than pure competition.
C) The monopolistically competitive demand curve is more elastic than the demand curve facing a monopolistic firm.
D) Monopolistic competition does not lead to any economic inefficiency since firms in this industry cannot sustain economic profits.

Question

Quizplus · Accepted Answer

This statement is false because monopolistic competition can lead to economic inefficiency due to the fact that firms have some monopoly power and may not produce at the lowest possible cost. Additionally, firms may engage in non-price competition (such as advertising) which can result in higher costs for consumers.

Which Statement Concerning Monopolistic Competition Is False