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Which of the following is a characteristic of a monopolistically competitive market?

Multiple choice question.

Firms not having any control over the selling price of goods

High barriers to entry and exit

A perfectly elastic demand curve

A relatively large number of sellers producing differentiated products

User Mdameer
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1 Answer

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Final answer:

A monopolistically competitive market is characterized by a large number of sellers offering differentiated products, with few barriers to entry and some degree of price control.

Step-by-step explanation:

The characteristic of a monopolistically competitive market that is correct among the given options is a relatively large number of sellers producing differentiated products. This market structure is characterized by many producers supplying products that are similar but not identical and where there are few barriers to entry. Sellers have some control over the selling price due to product differentiation.

Unlike perfectly competitive markets, which have a perfectly elastic demand curve, the demand curve faced by a monopolistically competitive firm falls in between perfectly elastic and a monopoly's downward sloping demand curve.

User Duelist
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