On the spectrum of market structures, monopolistic competition lies:
A) at the same location as monopoly.
B) at the same location as perfect competition.
C) between perfect competition and monopoly.
D) to the left of both perfect competition and monopoly.

Question

Quizplus · Accepted Answer

Monopolistic competition is a market structure that is characterized by many firms with differentiated products, ease of entry and exit, and some market power. It is not as extreme as a monopoly, where there is only one firm with complete market power, but it is also not as highly competitive as perfect competition, where there are many firms with identical products and no market power. Thus, monopolistic competition lies between perfect competition and monopoly.

On the Spectrum of Market Structures, Monopolistic Competition Lies