Monopolistic competition constitutes: (a) Single firm producing close substitutes (b) Many firms producing close substitutes (c) Many firms producing differentiated substitutes (d)... Monopolistic competition constitutes: (a) Single firm producing close substitutes (b) Many firms producing close substitutes (c) Many firms producing differentiated substitutes (d) Few firms producing differentiated substitutes
Understand the Problem
The question is asking about the characteristics of monopolistic competition and provides multiple-choice options related to the number of firms and the nature of the products they produce.
Answer
Many firms producing differentiated substitutes.
Monopolistic competition constitutes many firms producing differentiated substitutes.
Answer for screen readers
Monopolistic competition constitutes many firms producing differentiated substitutes.
More Information
Monopolistic competition features many firms each offering a product that is similar but not identical to the others. This is in contrast to perfect competition, where products are perfect substitutes, and to monopoly, where one firm dominates.
Tips
A common mistake is confusing monopolistic competition with perfect competition or oligopoly. In monopolistic competition, firms produce similar yet differentiated products, unlike in perfect competition where products are identical.
Sources
- Monopolistic Competition: Definition, How it Works, Pros and Cons - investopedia.com
- Monopolistic competition - Wikipedia - en.wikipedia.org
- Chapter 5. Monopolistic Competition and Oligopoly - kstatelibraries.pressbooks.pub
AI-generated content may contain errors. Please verify critical information
