Monopolistic competition is similar to perfect competition in that:
A)there are only a few firms in the market.
B)entry into and exit from the market is easy.
C)there are significant barriers to entry in the market.
D)each firm sells a homogeneous product.
E)each firm differentiates its product through advertising.

Question

Quizplus · Accepted Answer

Monopolistic competition is similar to perfect competition in that entry into and exit from the market is easy. However, unlike perfect competition, monopolistic competition involves differentiated products and has some degree of market power for each firm. There are also usually a larger number of firms in a monopolistically competitive market compared to a perfectly competitive market.

Monopolistic Competition Is Similar to Perfect Competition in That