In monopolistic competition

Question

Quizplus · Accepted Answer

Monopolistic competition is characterized by a large number of small firms that produce similar but not identical products. Therefore, the size of one firm is small relative to the size of the industry. Option A, C, and E are incorrect because monopolistic competition involves more than two firms, the size of firms is relatively small, and there are several firms operating in the market. Option D is incorrect because each firm in monopolistic competition is not a price taker but instead they have some degree of market power to set their prices.

In Monopolistic Competition