If the toothpaste market is monopolistically competitive, product differentiation will take place in which of the following ways?
A)the production of different varieties of toothpaste, including those with whitening agents
B)differentiation in the locations where certain toothpastes are available
C)quality differences among the various brands
D)the production of different varieties of toothpaste, including those with whitening agents, differentiation in the locations where certain toothpastes are available, and quality differences among the various brands

Question

Quizplus · Accepted Answer

In a monopolistically competitive market, firms differentiate their products to create a perceived differentiation in the eyes of consumers. This can be achieved through various means such as producing different varieties of toothpaste (including those with whitening agents), differentiation in the locations where certain toothpastes are available and quality differences among the various brands. Therefore, D is the best choice as it covers all the methods of product differentiation that are likely to occur in a monopolistically competitive toothpaste market.

If the Toothpaste Market Is Monopolistically Competitive, Product Differentiation Will