While Burger Cult Inc.operates in a monopolistically competitive industry,Citizen Telecom Inc.operates in a monopoly.Keeping this information in mind,which of the following statements is most likely true?
A) The threat of new entrants will be higher for Burger Cult Inc. than Citizen Telecom Inc.
B) Burger Cult Inc. will have more pricing power than Citizen Telecom Inc.
C) Burger Cult Inc. will have more profit potential than Citizen Telecom Inc.
D) The number of buyers will be limited for both Burger Cult Inc. and Citizen Telecom Inc.

Question

Quizplus · Accepted Answer

The threat of new entrants is higher for Burger Cult Inc. than Citizen Telecom Inc. A monopolistically competitive industry is characterized by many firms, a differentiated product, some obstacles to entry, and the ability to raise prices for a relatively unique product while retaining customers. An industry is a monopoly when there is only one (large) firm supplying the market.