g What is one difference between a firm in a perfectly competitive industry and a firm in a monopolistically competitive industry? A monopolistically competitive industry does not have a large number of sellers. A monopolistically competitive firm does not face entry from other firms. A monopolistically competitive firm does not choose a level of output where marginal cost is equal to marginal revenue. A monopolistically competitive firm does not have the exact same product as other firms.

A monopolistic market has a large number of buyers and sellers. The sellers produce close substitutes. The firms rely on advertising. There is a relatively higher degree of competition and restriction on entry as compared to a perfectly competitive market. The firms are able to maximize profit at the point where marginal cost is equal to marginal benefit.

In a perfectly competitive market, however, there are large number of buyers and sellers. These sellers produce homogenous products. There is no restriction on entry and exit of the new firms. The profit is maximized at the point where price, marginal revenue, and, average revenue are equal to marginal cost.