What is the main difference between a perfectly competitive industry and a monopolistically competitive firm?
A) the number of firms in the market
B) product differentiation
C) zero economic profit
D) no barriers to entry

Question

Quizplus · Accepted Answer

The main difference between a perfectly competitive industry and a monopolistically competitive firm is product differentiation. In a perfectly competitive industry, firms offer identical products and cannot charge higher prices without losing market share. In a monopolistically competitive firm, firms offer slightly different products and have some control over pricing based on brand recognition and perceived differences in quality or other features. The number of firms, zero economic profit, and no barriers to entry can also be characteristics of both perfectly competitive and monopolistically competitive markets.

What Is the Main Difference Between a Perfectly Competitive Industry