CA Foundation · Business Economics · Price Determination in Different Markets
Which feature is common to both perfect competition and monopolistic competition?
A large number of sellers is common to both perfect and monopolistic competition. Homogeneous products and a perfectly elastic demand curve for the firm belong only to perfect competition, while monopolistic competition has differentiated products and heavy selling costs.
- AHomogeneous products
- BLarge number of sellersCorrect
- CPerfectly elastic demand for the firm's product
- DAbsence of selling costs
Explanation
Both forms have a large number of sellers. Homogeneous products and perfectly elastic firm demand belong only to perfect competition. Selling costs such as advertising are significant in monopolistic competition.
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