A monopolistically competitive market is described as one in which there are
A)a few firms producing an identical product.
B)a large number of firms selling similar, but not identical, products.
C)a few firms producing differentiated products.
D)one large firm and many small firms producing identical products.

Question

Quizplus · Accepted Answer

Monopolistic competition is characterized by a large number of firms selling similar but not identical products. Each firm has some degree of market power due to the differentiation of its product, but there are still many substitutes available. This leads to price competition and non-price competition, such as advertising and product differentiation, in order to capture market share.

A Monopolistically Competitive Market Is Described as One in Which