Monopolistic competition differs from perfect competition only with regard to the number of firms participating in the market.

Question

Quizplus · Accepted Answer

Monopolistic competition differs from perfect competition not only in terms of the number of firms, but also because firms in monopolistic competition sell differentiated products and have some degree of market power, allowing them to set prices above marginal costs. In perfect competition, by contrast, firms sell homogeneous products and have no market power.

Monopolistic Competition Differs from Perfect Competition Only with Regard to the Number