One of the main differences between an oligopolistic firm 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

Monopolistically competitive firms have some degree of independence in terms of pricing and output decisions, while oligopolistic firms are highly interdependent and often engage in tacit collusion. Option A is incorrect because both firms face downward sloping demand curves. Option C is incorrect because both types of firms have some degree of market power. Option D is incorrect because both types of firms have low barriers to entry compared to a monopoly.

One of the Main Differences Between an Oligopolistic Firm and a Monopolistically