The characteristic that distinguishes a perfectly competitive market from a monopolistically competitive market is the:
A)ease of entry.
B)number of firms operating in the market.
C)degree of government regulation in the activities of the firms.
D)product differentiation.
E)extent of market share of each firm.

Question

Quizplus · Accepted Answer

The key characteristic that distinguishes a perfectly competitive market from a monopolistically competitive market is product differentiation. In a perfectly competitive market, all firms offer identical or homogeneous products, while in a monopolistically competitive market, there is some degree of differentiation or diversity in products, which allows firms to compete based on product quality, branding, design, etc. The other options - ease of entry, number of firms, government regulation, and market share - may also differ between the two types of markets, but they are not the defining characteristic that distinguishes them from each other.

The Characteristic That Distinguishes a Perfectly Competitive Market from a Monopolistically