Monopolistic competition differs from monopoly in several key aspects. In monopolistic competition:
- a) Firms maximize profits: Similar to monopolies, firms in monopolistic competition aim to maximize their profits by adjusting their output level.
- b) Firms are free to enter and exit: Unlike a monopoly, where barriers to entry prevent new firms from entering the market, monopolistic competition has relatively low barriers, allowing new firms to enter or exit the market freely.
- c) Firms set marginal revenue equal to marginal cost to maximize profit: This principle applies to both monopolies and firms in monopolistic competition. They determine the optimal output level where marginal revenue equals marginal cost to maximize their profits.
Therefore, all of the above options (a, b, c) highlight the differences between monopolistic competition and monopoly. In summary, the correct answer is d) all of the above are different.