Monopolistic competition is characterized by which of the following attributes?

Question

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(i) Differentiated products: Firms in monopolistic competition produce differentiated products, meaning their products are slightly different from one another. This allows them to have some control over the price of their product.

(ii) Many firms: There are many firms in a monopolistically competitive market, none of which have a significant market share. This means that each firm has limited control over the market price.

(iii) Free entry and exit: In a monopolistically competitive market, barriers to entry and exit are low. This means that new firms can enter the market easily, and existing firms can exit just as easily. This prevents any one firm from having too much power in the market.

Monopolistic Competition Is Characterized by Which of the Following Attributes