Monopolistic competition resembles pure competition because: (i) both industries emphasize nonprice competition. (ii) barriers to entry are either weak or nonexistent. (iii) in both instances, firms will operate at the minimum point on their long-run average total cost curves. (iv) both industries entail the production of differentiated products.
Added by Leah E.
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While monopolistic competition does emphasize nonprice competition (through product differentiation, advertising, etc.), pure competition does not. In pure competition, products are identical and firms cannot influence the market price, so there is no nonprice Show more…
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