Monopolistic competition is like monopoly in that
A) price changes are dictated by changes in supply.
B) both industries represent price-taking firms.
C) both industries represent price-making firms.
D) both industries have high barriers to entry.
E) neither industry has high barriers to entry.

Question

Quizplus · Accepted Answer

Monopolistic competition is like monopoly in that both industries represent price-making firms. In monopolistic competition, firms have a degree of market power due to the differentiation of their products, allowing them to have control over the price of their product. Similarly, monopolies have complete control over the price of their product due to the absence of close substitutes. However, monopolistic competition differs from monopoly in that there are no significant barriers to entry, meaning other firms can easily enter the market and compete.

Monopolistic Competition Is Like Monopoly in That