Which set of characteristics below best describes the basic features of monopolistic competition?
A) easy entry, many firms, and standardized products
B) barriers to entry, few firms, and differentiated products
C) easy entry, many firms, and differentiated products
D) easy entry, few firms, and standardized products

Question

Quizplus · Accepted Answer

Monopolistic competition is characterized by easy entry into the market, a large number of firms, and differentiated products. These differentiated products are not considered perfect substitutes, which allows firms to have some control over the price they charge. This differentiation also creates some barriers to entry as new firms must compete against established brands. Therefore, option C, which includes easy entry, many firms, and differentiated products, is the best choice that describes monopolistic competition.

Which Set of Characteristics Below Best Describes the Basic Features