Monopolistic Competition is one where _____.

number of firms is large

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there is free entry and exit of firms

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goods produced by them are not homogeneous

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all of these

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Solution

The correct option is C all of these
Monopolistic competition is a competition where there are a large number of sellers who sell related products which are close substitutes for each other. Also, there are no barriers to entry. Hence, there is a free entry and exit of firms. As a result, all these are features of monopolistic competition.

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Explain 'freedom of entry and exit of firms in industry' feature of monopolistic competition.

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(a) large number of buyers and sellers

(b) freedom of entry and exit to firms

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