Under monopolistic competition, the number of firms increases as fixed entry costs fall and as demand for the type of good produced in the market increases.

Answer the following statement true (T) or false (F)

True

Rationale: Fixed entry costs keep firms from coming into the market to make the positive profit that firms in the market are earning -- so a decrease in fixed entry costs implies more firms will enter. And as more consumers demand these goods, there is more "room" in the market for firms to enter.