The market for toothbrushes has 1,000 producers. There are no barriers to entry. Some producers are able to charge higher prices than others because of small differences in their toothbrushes. What type of market exists for toothbrushes?

Question

Quizplus · Accepted Answer

This scenario describes monopolistic competition, where many producers sell products that are differentiated from one another (in this case, by "small differences in their toothbrushes") and there are no barriers to entry, allowing for free competition among a large number of firms.

The Market for Toothbrushes Has 1,000 Producers