Which of the following statements concerning monopolistic competition is false?

• A. Firms in monopolistic competition face barriers to entry.
• B. Firms in monopolistic competition sell differentiated products.
• C. Firms have some control over the price due to product differentiation.
• D. There are many firms competing in the market.

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the characteristics of monopolistic competition. These include many firms in the market, product differentiation, and free entry and exit (no significant barriers to entry).
2. Step 2: Analyze each statement in the problem: (a) 'Firms in monopolistic competition face barriers to entry' — recall that monopolistic competition typically has low or no barriers to entry, so this statement may be false.
3. Step 3: Check the statement 'Firms in monopolistic competition sell differentiated products' — this is true because product differentiation is a key feature of monopolistic competition.
4. Step 4: Evaluate 'Firms have some control over the price due to product differentiation' — this is true since differentiation gives firms some price-setting power.
5. Step 5: Consider 'There are many firms competing in the market' — this is true as monopolistic competition involves many firms competing.