Question

For all its similarities to a monopolist in the short run, the monopolistically competitive firm faces one huge problem that the monopolist does not in the long run: a) demand is downward sloping. b) other firms can enter the market. c) products are differentiated. d) other firms cannot enter the market.

Answer 1

B) other firms can enter the market.

Step-by-step explanation:

In a monopolistically competitive market, there are lots of suppliers that offer differentiated products to lots of consumers, e.g. restaurants. In a monopolistic market, only one supplier exists.

In a monopolistically competitive market the barriers of entry are low, and other competitors can continually enter the market, while it is very difficult for other competitors to enter a monopolist's market.