Which of the following is not an assumption of the theory of monopolistic competition?
A)There are many sellers and buyers.
B)Each firm produces and sells a slightly differentiated product.
C)There is easy entry.
D)There is easy exit.
E)All firms face the same cost conditions.

Question

Quizplus · Accepted Answer

The theory of monopolistic competition does not assume that all firms face the same cost conditions. This assumption is more aligned with perfect competition. In monopolistic competition, firms can have different cost structures due to differences in production techniques, access to resources, and other factors.

Which of the Following Is Not an Assumption of the Theory