Question

A major characteristic of monopolistic competition is that prices will be

A. higher than in perfect competition.

B. lower than in perfect competition.

C. higher than in a true monopoly.

D. unrelated to the type of competition.

Answer 1

A major characteristic of monopolistic competition is that prices will be A. higher than in perfect competition. 

Answer 2

Answer: A. higher than in perfect competition.

Explanation:

In a monopolistic market, there is only one business that has total market control and can prescribe the price and supply level of certain goods and services. This means that prices are frequently high. On the other hand, in perfect competition, there are many businesses, but none has market control, so prices are prescribed by supply and demand.