10. One of the problems in evaluating the efficiency of monopolistic competition is that:
- it is more difficulty to determine the shape of cost curves in monopolistically competitive industries than in other industrial structures.
- there is no obvious or agreed upon way to evaluate whether the amount of allocative inefficiency is justified by the amount of product diversity.
- we can't tell if the demand curve is downward sloping or not.
- there is never any difficulty, as the more diversity there is the more allocatively efficient the industry will be.
- there is no difficulty as long as there are not barriers to entry since without barriers profits go to zero in the long run and thus the firms are allocatively efficient.
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