Monopolistic competition is characterized by firms that:

• A. face significant barriers to entry
• B. sell differentiated products and have some control over price
• C. sell identical products and are price takers
• D. operate as a single seller in the market

Answer: (B)

Verified step by step guidance

1. Understand the key characteristics of monopolistic competition: many firms, product differentiation, and some control over price.
2. Recall that in monopolistic competition, firms sell products that are similar but not identical, which allows them to have some pricing power.
3. Recognize that unlike monopoly, firms in monopolistic competition face low or no significant barriers to entry, meaning new firms can enter the market relatively easily.
4. Contrast monopolistic competition with perfect competition, where firms sell identical products and are price takers, and with monopoly, where a single seller dominates the market.
5. Conclude that the correct description of monopolistic competition is that firms sell differentiated products and have some control over price.