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19 April, 07:34

What is one difference between a firm in a perfectly competitive industry and a firm in a monopolistically competitive industry?

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  1. 19 April, 11:10
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    The correct answer is: product differentiation.

    Explanation:

    A perfectly competitive industry has a large number of firms producing identical products. All the firms are price takers and the price is determined by the market forces of demand and supply.

    In a monopolistic market, there is a large number of firms selling differentiated products. The firms are price makers facing a downward sloping demand curve.

    A firm in a monopolistic market thus has to face competition from firms producing close substitutes, there is no such thing with a firm in a perfectly competitive market.
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