One difference between monopolistic competition and pure competition is that:

• A. Firms in pure competition have significant control over price, while firms in monopolistic competition are price takers.
• B. There are only a few firms in monopolistic competition, while pure competition has only one firm.
• C. Firms in monopolistic competition sell differentiated products, while firms in pure competition sell identical products.
• D. Barriers to entry are high in pure competition but low in monopolistic competition.

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the characteristics of pure competition. In pure competition, there are many firms selling identical (homogeneous) products, and each firm is a price taker with no control over the market price.
2. Step 2: Understand the characteristics of monopolistic competition. In monopolistic competition, there are many firms as well, but each firm sells differentiated products, giving them some control over their own prices.
3. Step 3: Analyze the given options by comparing these characteristics: whether firms have price control, the number of firms, product differentiation, and barriers to entry.
4. Step 4: Identify that the key difference is product differentiation: firms in monopolistic competition sell differentiated products, while firms in pure competition sell identical products.
5. Step 5: Confirm that other statements are incorrect based on the definitions: firms in pure competition are price takers (not having significant price control), monopolistic competition has many firms (not few), and barriers to entry are typically low in pure competition (not high).