What prevents a monopolistic competition from being perfectly competitive?
A. Consumers are not knowledgeable.
B. The market is dominated by one firm.
C. Products are not identical.
D. The barriers to entry are significant.
Is it A?
So the answer is C.
No.
https://www.investopedia.com/ask/answers/040915/what-difference-between-monopolistic-market-and-perfect-competition.asp
Yes.
No, the correct answer is C. Products are not identical.
In a perfectly competitive market, the key characteristic is that products are identical or homogeneous, meaning consumers perceive no difference between the products offered by different firms. This ensures that consumers have perfect information and can make informed choices based solely on price.
However, in monopolistic competition, products are differentiated, meaning that firms have some control over the price they charge due to the perceived differences in their products. This differentiation could be based on branding, packaging, quality, or other factors that make the products distinct in the eyes of consumers.
Barriers to entry (option D) can also play a role in preventing perfect competition, as they limit the ability of new firms to enter the market and compete with existing firms. However, it is the lack of product homogeneity (option C) that is the primary factor distinguishing monopolistic competition from perfect competition.