A major difference between monopoly and monopolistic competition is
A)One maximizes profits by setting MR equal to MC,and the other does not.
B)The number of firms in the market.
C)One type of firm has market power,and the other does not.

Question

Quizplus · Accepted Answer

The key difference between a monopoly and monopolistic competition is the number of firms in the market. A monopoly is a single supplier of a product with no close substitutes, while monopolistic competition involves multiple firms producing differentiated products that can be close substitutes for each other. Both types of firms may have market power, but monopolistic competition often involves lower levels of market power compared to a monopoly. However, both types of firms may seek to maximize profits by setting marginal revenue equal to marginal cost.

A Major Difference Between Monopoly and Monopolistic Competition Is