Why does the term "competition" apply to the market structure known as "monopolistic competition"?

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Because there are numerous sellers in the market and firms can freely enter and exit, similar to a perfectly competitive market.Because firms in monopolistic competition face a demand curve that slopes downward, just like those in competitive markets.Because firms set their prices equal to the lowest point on their average total cost curve, as in competitive markets.Because products in this market are differentiated, similar to those in competitive markets.Because the government regulates prices to maintain competition among firms.

Explanation

The term "competition" in monopolistic competition highlights the presence of many sellers and the freedom for firms to enter or exit the market, much like in perfect competition. This distinguishes it from monopoly, where a single firm dominates. Other features, such as downward-sloping demand curves or product differentiation, do not define the "competition" aspect in this context.