Monopolistic Competition Occurs in a Market with Free Entry

question 20

Multiple Choice

Monopolistic competition occurs in a market with free entry

• A) When there are only a few firms, each producing a unique product, prices above marginal cost and earns zero profit net of fixed costs
• B) When there is a large number of firms, each producing an identical product, prices above marginal cost and earns zero profit net of its fixed costs
• C) When there is a large number of firms, each of which produces a unique product, prices above marginal cost and earns zero profit net of its fixed costs
• D) When there is a large number of firms, each of which produces a unique product, prices above marginal cost and earns a positive profit net of its fixed costs

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