A monopolistically competitive market consists of __________ firms selling _________ to many buyers.
A)a small number; differentiated products
B)many; differentiated products
C)many; identical products
D)a small number; identical products

Question

Quizplus · Accepted Answer

In a monopolistically competitive market, there are many firms selling differentiated products to many buyers. This means that each firm produces a slightly different product from its competitors, but there are still many competitors in the market. A monopolistically competitive market consists of many firms selling differentiated products to many buyers. This means that there are enough firms to ensure some level of competition, but the products are differentiated in some way (e.g. branding, quality, features) to give each firm some market power. This differentiation allows firms to set slightly different prices and capture some of the consumer surplus, but the competition prevents them from earning significant long-term profits.

A Monopolistically Competitive Market Consists of __________ Firms Selling _________

A Monopolistically Competitive Market Consists of __ Firms Selling _