Asked by Cynthia Ocampo on Jul 04, 2024
Verified
Which feature is shared by monopolistic competition and perfect competition?
A) few firms in the industry
B) no barriers to entry or exit in the long run
C) absolute market power
D) standardized products
Perfect Competition
A market structure characterized by a large number of small firms, identical products, and freedom of entry and exit, leading to price takers.
Barriers To Entry
Economic, procedural, or regulatory obstacles that prevent or deter new competitors from easily entering an industry or area of business.
Absolute Market Power
The ability of a single economic actor, or a group of actors, to control market prices, output, and/or the market entry of new competitors without external interference.
- Distinguish among different market structures including monopolistic competition, monopoly, oligopoly, and perfect competition, by understanding their conditions and types.
Verified Answer
ZK
Zybrea KnightJul 05, 2024
Final Answer :
B
Explanation :
Both monopolistic competition and perfect competition have no barriers to entry or exit in the long run, meaning that new firms can enter the market and existing firms can leave without facing significant obstacles. However, they differ in other features such as the number of firms in the industry and the degree of product differentiation. Monopolistic competition involves many firms and differentiated products, while perfect competition involves many firms and standardized products. Monopolistic competition also does not have absolute market power, as firms have some control over their prices but face competition from close substitutes.
Learning Objectives
- Distinguish among different market structures including monopolistic competition, monopoly, oligopoly, and perfect competition, by understanding their conditions and types.