Question

A monopolistic competitive
firm and a monopoly
are similar because they
are both price takers.
Select one:
OTrue
O False

Answer 1

False

Monopolistic competition and monopoly are both forms of imperfect competition. Monopolitic competition is a type of market structure where there are many sellers in the market that sell differntiated goods. This means that these goods are not perfect sunstitues of each other and are slightly different from each other based on either pakaging, marketing strategies, quality etc. Since these goods are not perfect substitues and are different from each other in some way, each seller has some control over the price and can charge prices according to their wish which makes them price makers not price takers.

Monopoly is a type of market structure where there is only one seller of the good in the market. Since there is only one seller, the monopolist has full control over the price of the good which again makes it a price maker and not price taker.