Reading 20: Monopolistic Competition and Oligopoly

LOS a: Discuss the characteristics of monopolistic competition and oligopoly

1.Which of the following is least likely to be considered a feature that is common to both monopolistic competition and perfect competition?

A)   Extensive advertising to differentiate products.

B)   Zero economic profits in the long run.

C)   Output where marginal revenue equals marginal cost.

D)   Low or no barriers to entry.

The correct answer was A)

The only item listed in the question that monopolistic competition and perfect competition do not have in common is the use of advertising to differentiate their products. Extensive advertising is a key feature of monopolistic competition.