What makes monopolistic competition different from perfect competition?
A. No competition between firms
B. One firm dominates the market
C. Products are not identical
D. Prices are set by the government
Answer (2)
The correct answer is letter C. Products are not identicalIn monopolistic competition, businesses try to stand out by offering slightly different products. For example, different milk tea shops may all sell milk tea, but each offers special flavors, toppings, or presentation to attract customers.
The correct answer is C. Products are not identical.In perfect competition, many firms sell identical (homogeneous) products, so no single firm can influence the market price. In contrast, monopolistic competition has many firms selling similar but differentiated products (not identical), giving each firm some control over its prices because consumers may prefer one product over another due to branding, quality, or features.
