What is a key characteristic of a monopolistically competitive market structure?

Question

Quizplus · Accepted Answer

A key characteristic of a monopolistically competitive market structure is that there are sellers selling similar but differentiated products. This means that there are many firms in the market, but each offers a slightly different product or service, resulting in a degree of product differentiation. This differentiation allows firms to exert some control over the price of their product and compete on non-price factors, such as quality or branding. Few sellers (A) would indicate an oligopoly or monopoly, high barriers to entry (C) would indicate a more monopolistic market structure, and sellers acting to maximise revenue (D) is a goal of all firms regardless of market structure.

What Is a Key Characteristic of a Monopolistically Competitive Market