Which of the following conditions distinguishes monopolistic competition from perfect competition?
A)the number of sellers in the market
B)the freedom of entry and exit by firms in the market
C)the size of firms in the market
D)product differentiation

Question

Quizplus · Accepted Answer

Monopolistic competition is characterized by product differentiation, which means that firms offer slightly different products that are not perfect substitutes for each other. In contrast, perfect competition is characterized by homogeneous products, where all firms sell identical products. The number of sellers, freedom of entry and exit, and size of firms are not factors that distinguish monopolistic competition from perfect competition.

Which of the Following Conditions Distinguishes Monopolistic Competition from Perfect