Question

Monopolistic competition has which drawback compared to a monopoly?

A. Consumers have fewer options for buying new products.
B. Companies have less capital for expensive investments.
C. Prices are more likely to be fixed at high levels.
D. Governments are more likely to regulate them.

Answer 1

It is, in fact, indeed, most definitely, positively, B

Step-by-step explanation:

Answer 2

B. Companies have less capital for expensive investments.

Step-by-step explanation:

In monopolistic competition, there are many companies that compete in the same market. Each company only has some market power, because most of that power is shared among all of the companies of the market as a whole.

For this reason, companies in monopolistic competition obtain less revenue than companies in monopoly, and this means not only less profit but also less capital for expensive investments.