Question

Which of the following is a characteristic of an industry that is classified as a monopolistic competition?

There are no profits in a monopolistic competition.

There are no substantial barriers to entry.

One firm sells a specific product.

The product sold cannot be replicated.

Answer 1

The characteristic of an industry that is classified as monopolistic competition is:

**There are no substantial barriers to entry.**

In a monopolistic competition, there are many firms selling similar but differentiated products, and new firms can enter the market relatively easily, which is why barriers to entry are low.