Which of the following conditions distinguishes the monopolistic competitor from the monopolist?
A)Profit-maximizing rule
B)Downward slope of demand curve
C)Entry of rivals
D)Short-run economic profits

Question

Quizplus · Accepted Answer

The entry of rivals is what distinguishes monopolistic competition from monopoly. In a monopoly, there are no close substitutes and barriers to entry prevent new firms from entering and competing. However, in monopolistic competition, firms can enter and exit relatively easily, leading to a larger number of firms in the market and a greater degree of competition. Choices A, B, and D are characteristics shared by both monopolies and monopolistic competitors.

Which of the Following Conditions Distinguishes the Monopolistic Competitor from the Monopolist