There are many restaurants in a city, each one offering food and services that differ from those of its competitors. There is also free entry of sellers into the market, and each seller serves a very small fraction of the total number of meals served each day. The restaurant industry in Raleigh is best categorized as:

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The restaurant industry in Raleigh is best categorized as monopolistically competitive because there are many restaurants (sellers) offering differentiated products (food and services), and there is free entry and exit in the market. Each restaurant serves a small fraction of the total market, which is characteristic of monopolistic competition.

There Are Many Restaurants in a City, Each One Offering