A monopolistically competitive industry is characterized by b) many firms, differentiated products, and a free entry.
In this type of market structure, numerous firms compete against each other, each offering products that are similar but not identical. This product differentiation allows firms to have some control over pricing, unlike in perfect competition, where products are homogeneous.
Moreover, there are no significant barriers to entry or exit in a monopolistically competitive industry. This means that new firms can enter the market freely, contributing to a dynamic environment where existing firms must continuously innovate and improve their offerings to maintain market share.
Overall, the combination of many firms, product differentiation, and ease of entry defines the essence of monopolistic competition.