Monopolistic competition--which is typical in our market-directed economy--is caused by:
A) manipulation of markets by business firms.
B) customer preferences.
C) consumers' unwillingness to pay for differentiated products.
D) All of the above.
E) None of the above.

Question

Quizplus · Accepted Answer

Monopolistic competition is caused by customer preferences, as businesses seek to differentiate their products in order to attract consumers and gain a competitive edge. It is not caused by manipulation of markets by business firms or consumers' unwillingness to pay for differentiated products.

Monopolistic Competition--Which Is Typical in Our Market-Directed Economy--Is Caused By