If firms in an industry differentiated their products and made economic profits in the short-run, what other characteristic would be important to determine if this is an oligopoly or a monopolistically competitive market?
A) the number of firms in the market
B) the number of close substitutes for the good being produced
C) the number of buyers in the market
D) if the good being sold is a normal or inferior good

Question

Quizplus · Accepted Answer

The number of firms in the market is crucial in distinguishing between an oligopoly and a monopolistically competitive market. Oligopolies have a few dominant firms, while monopolistic competition has many firms.

If Firms in an Industry Differentiated Their Products and Made