Monopolistic competition is an inefficient market structure because
A)price exceeds marginal cost.
B)it has a deadweight loss, just as monopoly does.
C)at the equilibrium, some consumers will value the good at more than the marginal cost of production.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

Monopolistic competition is inefficient since it has a deadweight loss, just like a monopoly. Price exceeds marginal cost, indicating that some customers value the good more than the marginal cost of production. As a result, all possibilities proposed are correct.

Monopolistic Competition Is an Inefficient Market Structure Because