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9 December, 16:13

Which characteristic does monopolistic competition NOT have in common with perfect competition?

A. Individual firms earn normal profits in the long run.

B. Each firm has an insignificantly small market share.

C. Products of individual firms are different.

D. Entry and exit are easy.

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  1. 9 December, 16:41
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    C. Products of individual firms are different.

    Explanation:

    The monopolistic competition market has many competing sellers and manufacturers (businesses). In this type of market, firms compete by producing substitute (differentiated) goods that can replace each other, while not competing homogeneous goods. The production of differentiated goods gives this market both a competitive and monopolistic feature, but prices cannot be determined by a small number of companies due to the large number of sellers in the market. The important thing in the monopolistic competition market is that the goods are interesting, preferred and indispensable.

    Monopolistic competition features:

    1) There are many sellers.

    2) Differentiated products, products are not exactly the same as in the competitive market.

    3) Firms are not determining the price.

    4) Each firm has a decreasing demand curve.

    5) Companies can enter and leave the market without restrictions. This traffic continues until the profit of the companies becomes worthless.

    Perfect competition market; In a market, it is the market where no seller has the power to influence the price of the product he sells. There are very strict conditions for a market to be in perfect competition, and therefore it is difficult to find a full competition market in the real world. In full competition, P = MR = D and parallel to the quantity axis

    By saying the Conditions of Perfect Competition Market-perfect competition market is based on four assumptions:

    1) There are many buyers and sellers in the market.

    2) Homogeneity Condition: Each firm produces and sells the same and homogeneous type product.

    3) Mobility Condition: Firms can easily enter and exit the market.

    4) Clarity Condition: Buyers and sellers have all the information about the market.
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