![]() monopoly: A market where one company is the sole supplier.Monopolistic competitive markets have highly differentiated products have many firms providing the good or service firms can freely enter and exits in the long-run firms can make decisions independently there is some degree of market power and buyers and sellers have imperfect information.The second source of inefficiency is the fact that these firms operate with excess capacity. First, at its optimum output the firm charges a price that exceeds marginal costs. ![]() Markets that have monopolistic competition are inefficient for two reasons. ![]() A monopoly exists when a person or entity is the exclusive supplier of a good or service in a market.
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