Monopolistic competition is an industry characterized by a:
A) small number of firms producing identical products, with barriers to entry for firms.
B) small number of firms producing similar products, with relatively easy entry for firms.
C) large number of firms producing similar products, with relatively easy entry for firms.
D) large number of firms producing identical products, with relatively easy entry for firms.

Question

Quizplus · Accepted Answer

Monopolistic competition is an industry with a large number of firms producing similar products, and entry into the industry is relatively easy. This makes it easier for new firms to enter and compete in the market, leading to product differentiation among the existing firms. This means that each firm can charge a slightly different price and still attract customers due to the perceived differences in their products.

Monopolistic Competition Is an Industry Characterized by A