Question

Mention the similarities between perfect competition and monopolistic competition.

Mention two similarities between perfect competition and monopolistic competition.

State two similarities between perfect competition and monopolistic competition.

State any three similarities between perfect competition and monopolistic competition.

Answer 1

1. In both perfect competition and monopolistic competition, the number of firms is large.
2. Competition exists between the firms.
3. There are no barriers to entry and exit in both markets.
4. Equilibrium occurs at the point where the MC curve intersects the MR curve.
5. In the short run, there is supernormal profit or loss and in the long run, there are only normal profits in both market structures.