Unlike perfectly competitive markets, monopolistically competitive markets:
A) have significant barriers to entry.
B) face declining average costs at all levels of output.
C) have fewer firms.
D) produce differentiated products.
E) Answers face declining average costs at all levels of output and produce differentiated products are both correct.

Question

Quizplus · Accepted Answer

Monopolistically competitive markets are characterized by firms producing differentiated products, which distinguishes them from perfectly competitive markets where firms produce identical or homogenous products.

Unlike Perfectly Competitive Markets, Monopolistically Competitive Markets