Monopolistic competition is different from perfect competition because in monopolistic competition:
A)firms experience easy entry and exit.
B)there are many firms.
C)products are differentiated.
D)to maximize profits, a firm will produce where MR = MC.

Question

Quizplus · Accepted Answer

In a monopolistic competition, products are differentiated, which means firms have some degree of market power to set their own prices. While there are many firms in the market, they are able to differentiate their products through branding, advertising, and other non-price factors, which allows them to compete with one another while still maintaining some control over the market. Unlike in perfect competition where firms are price takers, firms in monopolistic competition can set their own prices to some extent. Easy entry and exit and the profit maximizing rule of MR=MC are characteristics of both perfect and monopolistic competition.

Monopolistic Competition Is Different from Perfect Competition Because in Monopolistic