Please I would to know if I choose the correct answer.
Which of the following characteristics does perfect competition share with monopolistic competition?
a)Price-taking firms
b)Zero long-run economic profit
c)homogeneous product
d)some barriers to entry
oof no answer 9 years later?
To determine the correct answer, let's analyze each option and see if it applies to both perfect competition and monopolistic competition:
a) Price-taking firms: This characteristic applies to perfect competition, where firms have no control over the market price. However, in monopolistic competition, firms have some control over pricing, so this characteristic does not apply to both types.
b) Zero long-run economic profit: This characteristic applies to perfect competition, where firms earn only enough profit to cover their costs in the long run. In monopolistic competition, firms can earn positive or negative long-run profits, so this characteristic does not apply to both types.
c) Homogeneous product: This characteristic applies to both perfect competition and monopolistic competition. In perfect competition, all firms produce identical products, and in monopolistic competition, firms differentiate their products to some extent.
d) Some barriers to entry: This characteristic applies to monopolistic competition, where firms can create obstacles to prevent new competitors from entering the market. In perfect competition, there are no barriers to entry, so this characteristic does not apply to both types.
Based on the analysis, the correct answer is option c) homogeneous product. It is the only characteristic that both perfect competition and monopolistic competition share.