GK
BUSINESS ECONOMICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Product homogeneity
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Fairly large number of firms
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Independent price-output policy
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Co-existence of efficient and inefficient firms
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Detailed explanation-1: -Firms in monopolistic competition typically try to differentiate their product in order to achieve in order to capture above-market returns. Hence products in monopolistic competition are not homogeneous. Hence option 3 is Correct.
Detailed explanation-2: -The correct answer to the first question is c. easy entry and exit. In a monopolistically competitive market many firms sell similar (but not identical) products (for example, the restaurant industry). The entry and exit if free in the monopolistically competitive markets.
Detailed explanation-3: -Under monopolistic competition, there are a large number of buyers and sellers in the market. Products of various firms are similar in nature but are differentiated in terms of brand name, shape, quality, etc. It is the feature which distinguishes monopolistic competition from perfect competition.