Which of the following characterizes monopolistic competition?
A)Many interdependent firms sell a homogeneous product.
B)A few firms produce a particular type of product.
C)Many firms produce a particular type of product,but each maintains some independent control over its own price.

Question

Quizplus · Accepted Answer

Monopolistic competition is characterized by a large number of firms producing a similar but differentiated product. Each firm has some control over pricing and marketing, making it different from pure competition where all firms sell identical products. A is incorrect because monopolistic competition is characterized by differentiated products, not homogeneous ones. B is incorrect because a few firms producing a particular type of product is more characteristic of an oligopoly.

Which of the Following Characterizes Monopolistic Competition