One of the main differences between an oligopoly and a monopolistically competitive firm is that a monopolistically competitive firm
A) Faces a horizontal demand curve; an oligopoly does not.
B) Is relatively independent; an oligopoly is interdependent.
C) Has no market power; an oligopoly has some market power.
D) Has high barriers to entry; an oligopoly does not.

Question

Quizplus · Accepted Answer

A monopolistically competitive firm is relatively independent as it does not face the same level of interdependence as an oligopoly. In an oligopoly, firms are closely interconnected and their actions have a significant impact on each other's profits. However, in a monopolistically competitive market, each firm has a limited level of market power and faces a downward-sloping demand curve, but still has some ability to set prices independently based on differentiation factors such as branding, advertising, and product quality.

One of the Main Differences Between an Oligopoly and a Monopolistically