What does monopolistic competition have in common with monopoly?
A) a large number of firms
B) a downward-sloping demand curve
C) the ability to collude with respect to price
D) mutual interdependence
E) barriers to entry

Question

Quizplus · Accepted Answer

Monopolistic competition and monopoly both face a downward-sloping demand curve, indicating that they can set their prices above marginal cost. Unlike perfect competition, where firms are price takers, both monopolistic competition and monopoly have some degree of price-setting power.

What Does Monopolistic Competition Have in Common with Monopoly