1. Monopolistic competition lies in between perfect competition and a monopoly. Would it be possible for a monopoly earn positive economic profits in the long run? Explain your answer. Would it be possible for monopolistically competitive firm earn positive economic profits in the long run? Explain your answer.
2. Give an example of a good that would belong to monopolistic competition. (Hint: Think about the type of goods that you use or see each day.) Use 2 of the characteristics to explain why you believe that good belongs to monopolistic competition. Keep in mind that there is one more market structure (oligopoly) that we will learn about next week. So, if the good does not meet all the characteristics, it may not be monopolistic competitive.