ECONOMICS
COMPETITION AND MARKET STRUCTURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Perfect competition has no barriers to entry, while monopolistic competition does.
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In perfect competition, firms produce identical goods, while in monopolistic competition, firms produce slightly different goods.
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Perfect competition has barriers to entry while monopolistic competition does not
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None of the above
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Detailed explanation-1: -Monopolistic competition is a type of imperfect competition where large number of sellers sell differentiated products which are not perfect substitutes whereas perfect competition is one where buyers and sellers are numerous and well informed about the market and they sell homogenous product.
Detailed explanation-2: -In perfect competition, firms produce identical goods, while in monopolistic competition, firms produce slightly different goods.
Detailed explanation-3: -Answer. Answer: The principal difference between these two is that in the case of perfect competition the firms are price takers, whereas in monopolistic competition the firms are price makers.
Detailed explanation-4: -Perfectly competitive producers are price takers that can choose how much to produce, but not the price at which they can sell their output. A monopoly exists when there is only one producer and many consumers.
Detailed explanation-5: -What Is the Difference Between Perfect Competition and Imperfect Competition? While perfect competition is an idealized market structure in which equal and identical products are sold, imperfect competition can be found in monopolies and real-life examples.