Which of the following is a characteristic of monopolistic competition?
A) standardized product
B) a relatively small number of firms
C) absence of nonprice competition
D) relatively easy entry

Question

Quizplus · Accepted Answer

Monopolistic competition is characterized by a large number of firms producing differentiated products, which means that there is a certain degree of product differentiation; therefore, each firm has a limited degree of market power. This limited market power causes firms to have to engage in nonprice competition in order to attract customers, such as advertising, marketing, branding, packaging, and other marketing strategies. Because of these strategies, there are fewer barriers to entry, which is why relatively easy entry is also a characteristic of monopolistic competition.

Which of the Following Is a Characteristic of Monopolistic Competition