![]() ![]() A central feature of monopolistic competition is that products are differentiated.There is freedom to enter or leave the market, as there are no major barriers to entry or exit.The entrepreneur has a more significant role than in firms that are perfectly competitive because of the increased risks associated with decision making.However, they cannot fully appreciate the restaurant or the meal until after they have dined. Once inside the restaurant, they can view the menu again, before ordering. For example, diners can review all the menus available from restaurants in a town, before they make their choice. Knowledge is widely spread between participants, but it is unlikely to be perfect.Each firm makes independent decisions about price and output, based on its product, its market, and its costs of production.Monopolistically competitive markets exhibit the following characteristics:
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