In most large cities there are a large number of bakeries.These bakeries produce similar,but not identical,products.Some bakeries claim to have the best cheesecakes in town,while others brag about their cookies or specialty breads.The bakery market in a large city is an example of:
A)Monopolistic competition.
B)Perfect competition.
C)An oligopoly.
D)A monopoly.

Question

Quizplus · Accepted Answer

Monopolistic competition is a market structure where there are many firms producing differentiated products. Each firm has some market power to set the price of its product. In this scenario, the bakeries produce similar but not identical products and each one claims to have a unique selling proposition, which gives them some market power. This is the characteristics of monopolistic competition. Therefore, the best choice is A.

In Most Large Cities There Are a Large Number of Bakeries.These