How does a monopoly differ from monopolistic competition?
A)A monopoly has market power while a firm in monopolistic competition does not have any market power.
B)A monopoly can never incur a loss, but a firm in monopolistic competition can.
C)In a monopoly there are significant entry barriers, but there are low barriers to entry in a monopolistically competitive market structure.
D)A monopoly faces a perfectly inelastic demand curve while a monopolistic competitor faces an elastic demand curve.

Question

Quizplus · Accepted Answer

Monopolies are characterized by significant barriers to entry, which can include legal restrictions, resource control, or high initial costs, preventing new firms from entering the market. In contrast, monopolistic competition involves markets with many firms that sell differentiated products, where there are low barriers to entry, allowing new firms to enter the market more easily.

How Does a Monopoly Differ from Monopolistic Competition