Which one of the following statements describes a market that is monopolistically competitive?
A)There are significant barriers to entry.
B)The products produced by the firms are identical.
C)Many firms compete by making similar but slightly different products.
D)There is a small number of large firms.
E)The product produced by one firm has no close substitutes.

Question

Quizplus · Accepted Answer

In a monopolistically competitive market, many firms produce products that are similar but not identical, leading to differentiation and product competition. There are low barriers to entry, meaning new firms can enter the market easily. Option A describes a market with high barriers to entry, which would be more characteristic of a monopoly or oligopoly. Option B describes a market with perfect competition, where all firms produce the same product. Option D describes an oligopoly market structure, where a small number of large firms dominate the market. Option E describes a monopoly market structure, where there is only one firm producing a product with no close substitutes.

Which One of the Following Statements Describes a Market That