Which of the following characterizes monopolistic competition?
A)Price leadership.
B)Zero long-run profit.
C)Retaliation.

Question

Quizplus · Accepted Answer

Monopolistic competition is a market structure where many firms sell differentiated products that are close substitutes but not identical. This differentiation allows firms to have some control over the price of their product, but there is enough competition in the market such that each firm only has a small market share. In the long run, firms in monopolistic competition will only earn zero economic profit due to the ease of entry and exit in the market. Price leadership and retaliation are characteristic of oligopoly, which is a different market structure.

Which of the Following Characterizes Monopolistic Competition