Monopolistic competition is similar to
A)perfect competition because the firms face downward-sloping demand curves and can earn only a normal profit in the long run
B)pure monopoly because the firms face downward-sloping demand curves and can earn only a normal profit in the long run
C)perfect competition because the firms face downward-sloping demand curves and similar to pure monopoly in that the firms can earn only a normal profit in the long run
D)pure monopoly because the firms face downward-sloping demand curves and similar to perfect competition in that the firms can earn only a normal profit in the long run
E)pure monopoly because the firms face downward-sloping demand curves and can earn an economic profit in the long run

Question

Quizplus · Accepted Answer

Monopolistic competition is similar to pure monopoly because firms face downward-sloping demand curves, but similar to perfect competition in that firms can earn only a normal profit in the long run due to the entry of new firms.

Monopolistic Competition Is Similar to