The main difference between perfect competition and monopolistic competition is
A)The degree of product differentiation.
B)The long-run economic profits that are expected.
C)The number of firms in the market.
D)The ease of entry and exit.

Question

Quizplus · Accepted Answer

The main difference between perfect competition and monopolistic competition is the degree of product differentiation. In perfect competition, products are identical and there is no differentiation, whereas in monopolistic competition, products are differentiated and unique. Therefore, choice A is the correct answer. The long-run economic profits, number of firms in the market, and ease of entry and exit can vary between these two types of markets, but they are not the main differentiating factors.

The Main Difference Between Perfect Competition and Monopolistic Competition Is