Final answer:
Monopolistic competition refers to a market structure where many firms sell differentiated products with low barriers to entry and a reliance on advertising to compete.
Step-by-step explanation:
Monopolistic competition is characterized by a market structure where many firms are involved in selling differentiated products. These products can be distinguished based on various factors such as service characteristics, location, and brand perception, giving consumers a variety of choices with subtle differences.
In monopolistic competition, firms face low barriers to entry, allowing new entrants to compete with existing firms. Moreover, firms under monopolistic competition are likely to invest in advertising as a way to differentiate their products and compete non-price-wise. Contrary to an oligopoly where a few large firms dominate the market and high barriers to entry exist, monopolistic competition offers a marketplace that is much more accessible and vibrant with competition.