One way in which monopolistic competition differs from oligopoly is that:

Question

Quizplus · Accepted Answer

Monopolistic competition involves a large number of firms competing with differentiated products, whereas oligopoly has only a few firms dominating the market. Therefore, option D is correct as it correctly identifies the difference between monopolistic competition and oligopoly. Option A is incorrect as there can be significant barriers to entry in oligopolies. Option B is also incorrect as oligopoly firms can earn supernormal profits. Option C is incorrect as strategic interactions between firms are a defining feature of oligopoly.

One Way in Which Monopolistic Competition Differs from Oligopoly Is