Despite ________ prices than can be reached under perfect competition,monopolistic competition results in ________ variety than can be reached in any other market.
A) higher; less
B) higher; greater
C) lower; less
D) lower; greater
E) more inefficient; more excessive

Question

Quizplus · Accepted Answer

Monopolistic competition is a market structure characterized by a large number of firms selling differentiated products that are close substitutes. The firms have some market power, which allows them to charge slightly higher prices than under perfect competition. Hence, option A is incorrect.

However, the firms differentiate their products by quality, design, features, packaging, and branding, which results in greater product variety than can be reached under perfect competition. Therefore, option B is the best choice.

Option C is incorrect because the question specifically states that monopolistic competition results in less variety than any other market. Option D is also incorrect for the same reason. Option E is irrelevant because it is not comparing monopolistic competition to any other type of market.

Despite ________ Prices Than Can Be Reached Under Perfect Competition,monopolistic