A monopolistically competitive market is like a monopoly in that

Question

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A monopolistically competitive market is characterized by firms having some control over prices, hence they set prices above marginal cost. This is also true for monopolies. Option A is incorrect because easy entry by new firms in the long run is restricted in a monopoly, while it is relatively easy in a monopolistically competitive market. Option B is incorrect because firms in a monopolistically competitive market, like firms in all market structures, seek to maximize profits. Option C is incorrect because firms in both market structures do not necessarily produce welfare-maximizing levels of output.

A Monopolistically Competitive Market Is Like a Monopoly in That