A significant difference between perfect competition and monopolistic competitio

Question

A significant difference between perfect competition and monopolistic competition is that a. a perfectly competitive firm sells a homogeneous product, while a monopolistic competitive firm sells a differentiated product. b. a perfectly competitive firm is a price searcher, while a monopolistic competitive firm is a price taker. c. a perfectly competitive firm sets price above marginal cost, while a monopolistic competitive firm sets price equal to marginal cost. d. a perfectly competitive firm faces a downward-sloping demand curve, while a monopolistic competitive firm faces a perfectly elastic demand curve.

Explanation / Answer

Ans: a. A perfectly competitive firm sells a homogeneous product, while a monopolistic competitive firm sells a differentiated product.

Explanation: The primary characterstics of perfectly competitive firm is homogeneous product where as the primary characterstics of monopolistic competitive firm is differentiated product.

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