Which of the following is not true of monopolistic competition? There exists fre

Question

Which of the following is not true of monopolistic competition?

There exists free entry and exit of firms.

There are a large number of buyers and sellers.

Each of the firms acts as a mini monopoly in the market.

Each of the firms faces a horizontal demand curve.

The firms produce differentiated products.

a.

There exists free entry and exit of firms.

b.

There are a large number of buyers and sellers.

c.

Each of the firms acts as a mini monopoly in the market.

d.

Each of the firms faces a horizontal demand curve.

e.

The firms produce differentiated products.

Explanation / Answer

Each of the firms faces a horizontal demand curve is  not true of monopolistic competition. This is because elasticity of demand is highly elastic and other options which are there in th list are all true characteristics of monopolistic competition. As you know there is free entry and exit of firms in the market, there are a large number of buyers and sellers, sellers have a little market power that means each of the firms acts as a mini monopoly in the market and finally the firms produce differentiated products.

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.