Monopolistic competition is characterized by:
A) homogeneous products.
B) barriers to entry
C) firms earning economic profits in the long run.
D) differentiated products.

Question

Quizplus · Accepted Answer

Monopolistic competition is characterized by firms producing differentiated products, which allows them to have some control over the price of their product. This means that there is some competition between firms, but also some degree of market power. Homogeneous products and barriers to entry are characteristics of other market structures, such as perfect competition and monopoly, respectively. In the long run, firms in monopolistic competition will compete away economic profits through the entry of new firms.

Monopolistic Competition Is Characterized By