Monopolistic competition differs from perfect competition primarily because ?
Correct answer: C. in monopolistic competition, firms can differentiate their products
- A. in monopolistic competition entry into the industry is blocked
- B. in monopolistic competition there are relatively few barriers to entry.
- C. in monopolistic competition, firms can differentiate their products
- D. in perfect competition firms can differentiate their products
Explanation
Both structures allow relatively easy entry, but monopolistic competition gives firms some market power through product differentiation. Perfectly competitive firms instead sell an identical product and are price takers.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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