Question

The feature that differentiates monopolistic competition from monopolies and oligopolies is that monopolistically competitive firms . Question 2 options: cannot influence market price by virtue of their size alone. are price takers. do not have price as a decision variable. benefit from barriers to entry.

Answer 1

Monopolistically competitive firms (A) cannot influence the market price by virtue of their size alone while monopolies and oligopolies can.

What is a monopoly?

• A monopoly occurs when there is a single seller in the market.
• The monopoly case is considered the polar opposite of perfect competition in conventional economic theory.
• The demand curve facing the monopolist is, by definition, the industry demand curve, which is downward sloping.

What is oligopoly?

• Oligopolistic markets are characterized by a small number of suppliers.
• They can be found in all nations and in a wide range of industries.
• Some oligopoly markets are very competitive, whereas others are substantially less so, or appear to be.

Monopolistically competitive enterprises, unlike monopolies and oligopolies, cannot influence market prices only through their size.

Therefore, monopolistically competitive firms (A) cannot influence the market price by virtue of their size alone while monopolies and oligopolies can.

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Correct question:

The feature that differentiates monopolistic competition from monopolies and oligopolies is that monopolistically competitive firms.

(A) cannot influence the market price by virtue of their size alone.

(B) are price takers.

(C) do not have a price as a decision variable.

(D) benefit from barriers to entry.