Monopolistically competitive firms are like perfectly competitive firms in that they both sell homogeneous products.

Homogeneous Products

Goods that are seen as identical by consumers, making them perfect substitutes for one another.

Perfectly Competitive

A market structure characterized by a large number of small firms, homogeneous products, and free entry and exit.

Monopolistically Competitive

Describes a market structure where many companies sell products that are similar but not identical, allowing for firms to have some market power.