In comparing monopolistic competition to perfect competition, one can

In comparing monopolistic competition to perfect competition, one can conclude that the lack of free entry is the key to having the ability to set price.

Indicate whether the statement is true or false

ANSWER

False. Free entry is the key to driving long-run profit to zero. The key to price-setting ability is the downward-sloping demand curve. This can, in general, result from having few firms, but is due to product differentiation when considering monopolistic competition..