In the long run, a perfectly competitive industry tends to develop differentiated products.

Question

Quizplus · Accepted Answer

In a perfectly competitive industry, there are many small firms producing identical products, and there is no room for differentiation. The presence of differentiated products is more likely in a monopolistically competitive industry where firms have some degree of control over the price and can differentiate their products to attract customers.

In the Long Run, a Perfectly Competitive Industry Tends to Develop