When comparing perfect competition and monopolistic competition,we find that
A)firms in monopolistic competition produce identical products just as do firms in perfect competition.
B)firms in monopolistic competition face barriers to entry,unlike firms in perfect competition.
C)advertising plays a large role in monopolistic competition,unlike in perfect competition.
D)firms in monopolistic competition are price takers just as is the case for firms in perfect competition.
E)firms in monopolistic competition each have a large market share.

Question

Quizplus · Accepted Answer

The main difference between perfect competition and monopolistic competition is that in monopolistic competition firms sell differentiated products, which means they can use advertising to create brand image and differentiate their product from competitors. Therefore, advertising plays a larger role in monopolistic competition compared to perfect competition. The other statements are inaccurate - firms in monopolistic competition do not produce identical products, face fewer barriers to entry compared to monopolies or oligopolies, are not price-takers as they have some degree of market power, and do not necessarily have a large market share.

When Comparing Perfect Competition and Monopolistic Competition,we Find That