Which of the following is a characteristic of a monopolistically competitive market? I. Firms sell differentiated products.
II) Each firm earns a positive economic profit in the long run.
III) Firms freely enter and exit the market.

Question

Quizplus · Accepted Answer

Monopolistically competitive markets are characterized by firms selling differentiated products, meaning that they offer unique features that set their products apart from those of their competitors. Additionally, firms are able to freely enter and exit the market, but this does not necessarily mean that each firm earns a positive economic profit in the long run. In fact, due to the level of competition in these markets, it is unlikely that all firms will be able to earn positive economic profits over time.

Which of the Following Is a Characteristic of a Monopolistically