Match the characteristics with their market structure:
(a) Price > MC in both short and long run
(b) Faces highly elastic demand
- A(a) Monopolistic competition, (b) Pure competition
- B(a) Pure Monopoly, (b) Monopolistic competition
- C(a) Pure competition, (b) Monopolistic competition
- D(a) Oligopoly, (b) Pure competition
Solution & Step-by-step Explanation
* Characteristic (a): In a Pure Monopoly, a single seller sets a price that stays above Marginal Cost (Price>MC) in both the short run and long run due to high barriers to entry and absolute market power.
Characteristic (b): In Monopolistic Competition, there are many sellers selling differentiated but close substitute products, leading to a highly elastic demand curve facing individual firms.
Characteristic (b): In Monopolistic Competition, there are many sellers selling differentiated but close substitute products, leading to a highly elastic demand curve facing individual firms.