Which of the following is a characteristic of a monopolistic competition?

Question

Firms have no market power.

There are relatively low barriers to entry.

All firms sell a standardized (homogeneous) product.

There are high barriers with steep prices in order to gain entry.

Answer 1

The correct characteristic of monopolistic competition from the options provided is:

There are relatively low barriers to entry.

In monopolistic competition, there are many firms that sell similar but not identical products, allowing them some degree of market power. This market structure is characterized by low barriers to entry, enabling new firms to enter the market relatively easily.