All of the following are key characteristics of a monopolistically competitive industry except A. a differentiated product. B. a homogeneous product. C. the existence of close substitutes. D. a large number of firms.

Question

Alonso Harrell

Business

30 January, 15:18

All of the following are key characteristics of a monopolistically competitive industry except A. a differentiated product. B. a homogeneous product. C. the existence of close substitutes. D. a large number of firms.

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Answers (1)

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Antwan Cooke · Answer 1

B. Homogenous product

Explanation:

Monopolistic competitive market is a market structure in which there are many sellers selling differentiated product.

Differentiated product are product that vary in taste or style. They are goods that can be substituted.

Monopolistic competitive firms gain some degree of market power by differentiating their products from those of other firms in the industry. Monopolistic competition firms achieve price control by selling a product that is in some way (s) different from close substitutes product.

Features of Monopolistic competitive firms

1. Existence of many sellers

2. Heterogeneous goods are sold

3. Existence of close substitute

4. Absence of barrier to entry of new firms and free exit to existing firms.

5. Existence of competitors.