If competitive market circumstances are such that there are a lot of sellers who use some price competition, some product differentiation, and the purpose of advertising is to differentiate the firm's products from competitors, then __________must exist in the industry.
A)pure competition
B)a pure monopoly
C)an oligopoly
D)monopolistic competition

Question

Quizplus · Accepted Answer

Monopolistic competition is characterized by a large number of firms in a market that are selling similar but not identical products, with some degree of product differentiation and price competition. This scenario describes advertising as a tool to differentiate the firm's products from competitors, which is a characteristic of monopolistic competition. Pure competition and pure monopoly do not involve any product differentiation, while an oligopoly is characterized by a small number of large firms dominating the market, which does not fit the given circumstances.

If Competitive Market Circumstances Are Such That There Are a Lot