Question five

For each of the following, state whether you agree or disagree. Explain your answer. a. monopolistically competitive firms produce their economic profits protected by barriers to entry. b. monopolistically competitive firms are efficient because, in the long run, price falls to equal marginal cost.

c. Explain why oligopoly is characterized by a kinked demand curve. Use relevant examples.

d. Explain why imperfect market structures do not attain allocative efficiency and discuss how governments deal with these inefficiencies