The correct answer is C. Product homogenity.
Monopolistic competition is a market structure in which there are a large number of firms selling products that are similar but not identical. Firms in a monopolistically competitive market have some control over price, but they are not price-makers like a monopoly. This is because consumers have some choice among the products offered by different firms.
The key features of monopolistic competition are:
- A large number of firms.
- Product differentiation.
- Free entry and exit.
- Independent price-setting.
A large number of firms means that no one firm has a large share of the market. This prevents any one firm from having a monopoly power. Product differentiation means that firms offer products that are similar but not identical. This gives firms some control over price, but it also means that they must compete with other firms for customers. Free entry and exit means that firms can enter or exit the market easily. This prevents firms from earning economic profits in the long run. Independent price-setting means that firms can set their own prices. This is in contrast to a perfectly competitive market, in which firms take the price as given.
Product homogenity is not a feature of monopolistic competition. In a monopolistically competitive market, firms offer products that are similar but not identical. This means that consumers have some choice among the products offered by different firms. Product homogenity would mean that all firms offer the same product, in which case there would be no competition and no choice for consumers.