Question

1. How is a monopolistically competitive market similar to a perfectly competitive market?

A. There are no restrictions on the entry of new firms.

B. Both have differentiated products with close substitutes.

C. Producers with market power set their own prices.

D. Both have homogeneous products with no close substitutes.

 

2. Which of the following common features do monopolistically competitive markets, and monopolies share?

A. Barriers restrict new firms from entering.

B. Firms face downward-sloping demand curves.

C. Consumers with market power set prices.

D. Producers with no market power set their own prices.