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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 relatively large number of sellers producing differentiated products

A perfectly elastic demand curve

1 Answer

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Final answer:

In a monopolistically competitive market, there is a large number of sellers offering differentiated products, allowing them to have some control over pricing, unlike in a perfectly competitive market.

Step-by-step explanation:

A characteristic of a monopolistically competitive market is having a relatively large number of sellers producing differentiated products.

Unlike perfectly competitive markets that have no barriers of entry or exit and where firms have no control over selling prices, monopolistically competitive markets can have few barriers to entry and exit.

Firms in these markets do not face a perfectly elastic demand curve, but rather have some degree of market power due to product differentiation.

This market structure stands in contrast to perfect competition and oligopoly, with the latter characterized by high barriers to entry and strategic decision-making among few dominant firms.

Monopolistic competition is characterized by a relatively large number of sellers producing differentiated products.

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