One of the characteristics of monopolistic competition is that
A. there is mobility of factors of production B. no single seller dominates the market C. the firms are price-takers D. consumers have perfect knowledge of price
Correct Answer: B
Explanation
Monopolistic competition is an industry in which many firms offer products or services that are similar, but not perfect substitutes. Barriers to entry and exit in a monopolistic competitive industry are low, and the decisions of any one firm do not directly affect those of its competitors. The following are Characteristics of monopolistic competition
Product differentiation. Many firms. Freedom of Entry and Exit. No single seller dominates the market Independent decision making. Some degree of market power. Buyers and sellers do not have perfect information (Imperfect Information)
