A major characteristic of monopolistic competition is:
A) mutual interdependence.
B) a high degree of collusion among firms.
C) a relatively large number of firms selling the product.
D) relatively easy entry into an industry but a relatively difficult exit from the industry.

Question

Quizplus · Accepted Answer

Monopolistic competition is characterized by a relatively large number of firms selling a differentiated product, where each firm has some market power but faces competition from other firms. Mutual interdependence may be present, but it is not a major characteristic. Collusion is unlikely due to the large number of firms and the lack of a standardized product. Entry into the industry is relatively easy, but exit may be difficult due to sunk costs.

A Major Characteristic of Monopolistic Competition Is