The primary difference between a monopolistically competitive firm and a monopoly is:
A) the ability for competition to enter the market in the long run.
B) the ability for competition to enter the market in the short run.
C) only the monopolistically competitive firm is a price taker.
D) only the monopolist can set his price equal to demand.

Question

Quizplus · Accepted Answer

The primary difference between a monopolistically competitive firm and a monopoly is that monopolistically competitive firms operate in a market where there is some degree of competition and entry of new firms is possible in the long run. On the other hand, monopolies operate in a market where there is no competition and entry of new firms is restricted or impossible. Therefore, option A is the correct answer.

The Primary Difference Between a Monopolistically Competitive Firm and a Monopoly