Under monopolistic competition:
A) there are significant barriers to entry.
B) there are few barriers to entry.
C) firms sell identical products.
D) firms face perfectly elastic demand curves.

Question

Quizplus · Accepted Answer

Monopolistic competition is characterized by a large number of firms producing differentiated products. There are relatively low barriers to entry, allowing new firms to enter and compete with existing firms. Therefore, choice B is the correct answer. Choices A, C, and D are incorrect because monopolistic competition does not have significant barriers to entry, firms do not sell identical products, and they do not face perfectly elastic demand curves.

Under Monopolistic Competition