In which market structure is there a large number of firms producing slightly differentiated products?
A) monopoly
B) oligopoly
C) only perfect competition
D) only monopolistic competition
E) either perfect competition or monopolistic competition

Question

Quizplus · Accepted Answer

Monopolistic competition is characterized by a large number of firms producing slightly differentiated products. This market structure is distinct from perfect competition because firms have some ability to exert control over the price of their product due to product differentiation. It is also distinct from oligopoly because there are more firms in the industry and they do not necessarily cooperate with each other as is often the case in oligopolistic markets. Therefore, option D (only monopolistic competition) is the correct answer.

In Which Market Structure Is There a Large Number of Firms