In monopolistic competition, which statement best describes the market compared with perfect competition?

In monopolistic competition, which statement best describes the market compared with perfect competition?

• A. Firms differentiate products and have some price-setting power; long-run profits are zero due to entry.
• B. Firms have identical products and no price-setting power.
• C. Firms face downward-sloping demand.
• D. Long-run profits are positive due to barriers to entry.

Answer: (B)