Monopolistic competition differs from monopoly because in monopolistic competition firms
A)maximize economic profit.
B)set marginal revenue equal to marginal cost to maximize profit.
C)are free to enter and exit.
D)are price takers.
E)make an economic profit in the long run.

Question

Quizplus · Accepted Answer

One of the defining characteristics of monopolistic competition is that firms are free to enter and exit the market. This means that there are generally many small firms in the market, each producing slightly differentiated products. Unlike a monopoly, where there is only one firm in the market and significant barriers to entry, monopolistic competition allows for more competition and the potential for new firms to enter the market and compete. However, monopolistic competition does not guarantee economic profit in the long run, as firms are still subject to market forces and the possibility of price competition.

Monopolistic Competition Differs from Monopoly Because in Monopolistic Competition Firms