How is a monopolistically competitive industry like perfect competition? How is it like monopoly?

How is a monopolistically competitive industry like perfect competition? How is it like monopoly?

 

answer:

Monopolistic competition is a market structure where firms differentiate their output, thus it makes them price-makers, however the barriers to entry are low or almost non-existent.

Monopolistic competition is more similar and like perfect competition than to monopoly. Monopolistic competition, like perfect competition, is a market structure in which there exists many firms, firms can easily enter and leave the industry. Also long-run economic profits will be zero.

Monopolistic competition is like monopoly since its a market structure where the firms sell products that are not perfect substitutes for each other in the market, and therefore firms gains some market power, and prices will be above marginal cost

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