One characteristic of monopolistic competition is that it has
A) many firms producing a slightly differentiated product.
B) many firms producing identical goods.
C) one firm producing a unique good.
D) a few firms producing a slightly differentiated product.
E) large barriers to entry.

Question

Quizplus · Accepted Answer

Monopolistic competition is characterized by many firms producing a slightly differentiated product. This means that while the products offered by different firms are similar, there are some differences in terms of quality, design, or other features that make them unique in the eyes of consumers. This differentiation allows firms to set their prices and make some profits, but there is still some competition among them. Hence, monopolistic competition is a type of market structure that combines elements of monopoly and perfect competition.

One Characteristic of Monopolistic Competition Is That It Has