Which of the following characteristics does perfect competition have in common with monopolistic competition?
a)price-taking firms
b)homogeneous products
c)no barriers to entry
d)neither market advertises
2007-11-17 06:11:44 · 4 answers · asked by Ben 1 in Social Science ➔ Economics
C
a is not right because monopolisticly competitive firms, by definition, have SOME pricing power.
b is not right because, again by definition, monopolisticly competitive firms have to be able to differentiate their products in some way- real or psychological.
d is not right because monopolisticly competitive firms usually have to advertise to differentiate their products. think of mcdonalds. It has to distinguish itself from the other chains as well as the millions of other mom and pop hamgurger stands. in addition, firms in perfectly competitive industries are, by definition, price takers and have perfectly elastic supply curves. Consequently, there is ABSOLUTELY NO BENEFIT for these firms to advertise.
2007-11-17 07:50:59 · answer #1 · answered by Homer J. Simpson 6 · 0⤊ 0⤋
C Although in the real world companies have start up costs, both the models for perfect competition and monopolistic competition assume there are none.
I agree with homer on the reasons for A B D
2007-11-17 17:42:16 · answer #2 · answered by meg 7 · 0⤊ 0⤋
Go with D. Im positive
2007-11-17 14:21:10 · answer #3 · answered by ♫ Mµ˚§iç ♪ 3 · 1⤊ 1⤋
i'd like to go with b)homogeneous products.
2007-11-17 14:16:57 · answer #4 · answered by boss of bosses 3 · 0⤊ 1⤋