Question

One way in which monopolistic competition differs from oligopoly is that

a. there are no barriers to entry in oligopolies.
b. in oligopoly markets there are only a few sellers.
c. all firms in an oligopoly eventually earn zero economic profits.
d. strategic interactions between firms are rare in oligopolies.

Answer 1

The correct answer is letter "B": in oligopoly markets there are only a few sellers.

Step-by-step explanation:

Monopolistic competition exists in industries that have many firms offering similar products or services for example restaurants, supermarkets and clothing stores. In monopolistic competition those products or services are not perfect substitutes from one another. On the other hand, an oligopoly is when a market is controlled by a small group of two or more firms. Businesses in an oligopoly can agree in price collusion and create barriers to entry for new commerce.