The existence of a large number of firms in monopolistic competition
A)means that each firm has a small market share.
B)makes it possible for each firm's price to deviate by a large amount from the average price of the other firms.
C)means that a firm must pay attention to the behaviour of all of its competitors.
D)makes collusion highly likely.
E)means that each firm is a price taker.

Question

Quizplus · Accepted Answer

In monopolistic competition, the presence of many firms ensures that each has only a small portion of the total market, limiting their individual market power and making them unable to significantly influence market prices on their own.

The Existence of a Large Number of Firms in Monopolistic