Which of the following is a distinguishing feature of a monopolistically competitive market?
A)A small number of buyers and sellers.
B)Barriers to entry and exit.
C)Firms produce differentiated products.
D)Firms set prices cooperatively.

Question

Quizplus · Accepted Answer

The distinguishing feature of a monopolistically competitive market is that firms produce differentiated products, meaning their products are not identical to those of their competitors. This differentiation can be based on brand, quality, features, or other factors that make their products unique in the eyes of consumers. This allows firms to have some degree of pricing power and influence over their market share. The other options - a small number of buyers and sellers, barriers to entry and exit, and firms setting prices cooperatively - are not necessarily unique to monopolistically competitive markets and can apply to other types of markets as well. In a monopolistically competitive market, firms produce differentiated products. This means that each firm's product is slightly different from its competitors, allowing them to have some degree of market power and control over their prices. However, there are usually many buyers and sellers in the market, and there are no significant barriers to entry or exit. Firms do not set prices cooperatively, as they are competing against each other for market share.

Which of the Following Is a Distinguishing Feature of a Monopolistically