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.

Question

Quizplus · Accepted Answer

The main difference between perfect competition and monopolistic competition is the degree of product differentiation. In perfect competition, products are homogenous, meaning that consumers are willing to buy any product that is offered as long as it meets their needs. In contrast, monopolistic competition features differentiated products, which means that firms have some degree of control over their prices due to consumer preferences for specific features or brands. The number of firms in the market and the long-run economic profits that are expected are also important characteristics but do not differentiate between perfect and monopolistic competition.

The Main Difference Between Perfect Competition and Monopolistic Competition Is