Firms in monopolistic competition resemble monopolies in that both types of firms

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Firms in monopolistic competition charge prices higher than their marginal costs, just as monopolies do. However, they do not earn positive economic profits in the long run due to low barriers to entry in the market, which allow for more competition and erode any temporary profits. They also do not possess the same level of barriers to entry that monopolies do, which make it difficult for potential rivals to enter the market. Finally, while firms in monopolistic competition may try to produce their output so that their average cost is minimized, they do not necessarily achieve this as they have more flexibility in their pricing and product differentiation strategies.

Firms in Monopolistic Competition Resemble Monopolies in That Both Types