Which assumption is part of the model of monopolistic competition?
A) Firms make identical products.
B) There is no collusion among firms.
C) There are significant barriers to entry into the market.
D) There are few buyers and sellers.

Question

Quizplus · Accepted Answer

The model of monopolistic competition assumes that there is no collusion among firms, meaning that firms are competing against each other instead of colluding to increase profits. A) is incorrect because the products are differentiated, not identical. C) is incorrect because there are no significant barriers to entry in monopolistic competition. D) is incorrect because there are many buyers and sellers in the market.

Which Assumption Is Part of the Model of Monopolistic Competition