Which of the following describes a feature shared by both monopolistic competition and perfect competition?
A)few firms competing in the industry
B)no barriers to entry or exit in the long run
C)absolute market power
D)standardized products

Question

Quizplus · Accepted Answer

Both monopolistic competition and perfect competition involve no barriers to entry or exit in the long run. In monopolistic competition, firms are able to enter and exit the market easily in response to profits, while in perfect competition, there are so many firms that no single firm has the ability to control the market or prevent new firms from entering. Few firms competing in the industry (A) and absolute market power (C) are features that are specific to monopolistic competition and not present in perfect competition. Standardized products (D) are a feature of perfect competition, but not of monopolistic competition.

Which of the Following Describes a Feature Shared by Both