Which of the following characterizes the difference between oligopoly and monopolistic competition?
A)Oligopolists are independent of each other;monopolistically competitive firms are interdependent.
B)Monopolistically competitive firms experience zero long-run economic profit;oligopolists may experience positive long-run economic profit.
C)There are many oligopolists but only a few monopolistically competitive firms.
D)Monopolistically competitive firms face horizontal demand curves;oligopolists face downward-sloping demand curves.

Question

Quizplus · Accepted Answer

In monopolistic competition, firms can differentiate their products and have some control over price, but in the long run, the entry of new firms erases economic profits, leading to zero economic profit. Oligopolies, with a few dominant firms, can maintain positive long-run economic profits due to barriers to entry and their ability to set prices above marginal cost.

Which of the Following Characterizes the Difference Between Oligopoly and Monopolistic