Monopolistic competition occurs when there are many firms competing for customers in a given market but their products are differentiated.

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Monopolistic competition is characterized by a large number of firms in a market, selling products that are similar but not identical. This differentiation may be based on factors such as quality, features, design, branding, or customer service. This variety of choices gives consumers some degree of control over price and product selection, while firms retain some market power through their unique offerings.

Monopolistic Competition Occurs When There Are Many Firms Competing for Customers