Which of the following industries is best characterized as monopolistically competitive?
A) Toothpaste
B) Crude oil
C) Agriculture
D) Local telephone service

Question

Quizplus · Accepted Answer

Monopolistic competition is characterized by many firms selling similar but not identical products, with each firm having some control over pricing due to product differentiation. This fits the toothpaste industry well, as there are many brands of toothpaste that offer slightly different features, such as flavors or sensitivity relief, but are still substitutes for one another.

Crude oil (B) is not monopolistically competitive because it is a commodity with little product differentiation, and a few large firms dominate the industry.

Agriculture (C) is not monopolistically competitive because it is characterized by many small producers selling identical or nearly identical products with little control over pricing.

Local telephone service (D) is not monopolistically competitive because it is typically provided by a single company that is regulated by the government, resulting in little control over pricing.

Which of the Following Industries Is Best Characterized as Monopolistically