Monopolistic competition is a market structure in which
A) firms face barriers to entry.
B) a large number of firms compete.
C) firms produce and sell an identical product.
D) firms face perfectly elastic demand for their product.
E) the firms have no ability to influence the price of their product.

Question

Quizplus · Accepted Answer

Monopolistic competition is characterized by a large number of firms that produce differentiated products. While entry barriers may exist, they are not a defining feature of the market structure. Additionally, the products are not identical, and firms have some ability to influence the price of their product. The demand for the product is also not perfectly elastic, as there are close substitutes available.

Monopolistic Competition Is a Market Structure in Which