The key feature of monopolistic competition that distinguishes it from perfect competition is
A)many sellers.
B)barriers to entry.
C)perfectly elastic demand.
D)product differentiation.
E)perfectly inelastic demand.

Question

Quizplus · Accepted Answer

The key feature of monopolistic competition is product differentiation, which allows firms to have some degree of market power and control over prices despite there being many sellers. Perfect competition is characterized by homogeneous products with no product differentiation, which results in a perfectly elastic demand curve. Barriers to entry are not a defining feature of monopolistic competition, and neither is the number of sellers. Perfectly inelastic demand is a scenario where consumers will pay any price for the good or service, which is not typically seen in monopolistic competition.

The Key Feature of Monopolistic Competition That Distinguishes It from Perfect