Which of the following features is common to both perfect competition and monopolistic competition?

Question

Quizplus · Accepted Answer

Both perfect competition and monopolistic competition allow for new firms to enter the market in the long run. In perfect competition, this keeps profits at zero, while in monopolistic competition, it leads to firms earning only normal profits in the long run. A is incorrect because in perfect competition, each firm faces a perfectly elastic demand curve, while in monopolistic competition, the demand curve is downward sloping. C is incorrect because in perfect competition, firms produce homogeneous products, while in monopolistic competition, products are differentiated. D is incorrect because in perfect competition, profits are zero in the long run, while in monopolistic competition, only normal profits are earned.

Which of the Following Features Is Common to Both Perfect