Monopolistic competition differs from perfect competition only in terms of the number of firms participating in the market.

Question

Quizplus · Accepted Answer

Monopolistic competition and perfect competition differ not only in terms of the number of firms, but also in terms of product differentiation, control over price, and barriers to entry. In monopolistic competition, firms produce slightly differentiated products, have some control over prices, and face low barriers to entry due to the lack of patent protection or exclusive access to resources. In contrast, perfect competition involves identical products, no control over price, and low barriers to entry due to low start-up costs and no exclusive access to resources.

Monopolistic Competition Differs from Perfect Competition Only in Terms of the Number