In monopolistic competition, a key characteristic is easy entry and exit. This means that new firms can enter the market without significant barriers, and existing firms can leave the market without facing huge losses. This fluidity encourages competition and variety among products.
Let’s break down the other options for clarity:
– A few firms: This is more typical of oligopoly markets, where a small number of firms dominate.
– Homogeneous products: Products in monopolistic competition are differentiated, meaning they are similar but not identical.
– Strategic dependence: This is characteristic of oligopolies where firms must consider the actions of their competitors.
Overall, in monopolistic competition, the correct answer is option C: Easy entry and exit.