The only difference between monopolistic competition and perfect competition is that a firm in monopolistic competition _____________ and a firm in perfect competition ____________.
A) is in an industry with only a few other firms;is in an industry with many other firms
B) sells a differentiated product;sells a homogeneous product
C) sells a homogeneous product;sells a differentiated product
D) cannot easily leave the industry;can easily leave the industry
E) can easily leave the industry;cannot easily leave the industry

Question

Quizplus · Accepted Answer

The main difference between monopolistic competition and perfect competition is the type of product being sold. In monopolistic competition, firms sell differentiated products, meaning they are not perfect substitutes for each other. In perfect competition, firms sell homogeneous (identical) products. The other choices listed in the question (number of firms in the industry and ease of leaving the industry) are not the distinguishing factors between monopolistic and perfect competition.

The Only Difference Between Monopolistic Competition and Perfect Competition Is