The monopolistic competition that is typical of the U.S. economy
A) always leads to higher prices, but it may not lead to higher consumer satisfaction.
B) is a problem because it does not result in products that reflect consumer's social values.
C) is the result of consumer preferences.
D) is the result of manipulation of markets by business firms.
E) None of these alternatives is correct.

Question

Quizplus · Accepted Answer

Monopolistic competition is the result of consumer preferences because there are many firms producing similar products, but they differentiate them by advertising, branding, or quality. Consumers have a variety of options to choose from, and they make their choices based on their needs and preferences. This competition encourages firms to innovate and improve their products to attract more customers. It may not always lead to lower prices, but it should result in higher consumer satisfaction because they have more choices and better products.

The Monopolistic Competition That Is Typical of the U