A major difference between pure competition and monopolistic competition is that under pure competition:
A) individual firms have more elastic demand curves.
B) the market demand curve is less elastic.
C) there are a smaller number of producers.
D) there are barriers to entry.

Question

Quizplus · Accepted Answer

Under pure competition, there are a large number of small firms producing homogenous products, which means that individual firms have more elastic demand curves as any increase in price will cause consumers to switch to a competitor's product. In contrast, monopolistic competition involves differentiated products, and although there are still many producers, individual firms face a less elastic demand curve as they have more pricing power due to product differentiation.

A Major Difference Between Pure Competition and Monopolistic Competition Is