Question

In a monopolistic-ally competitive market there are:

A) Many firms producing an identical product.
B) Many firms producing similar but not identical products.
C) Many firms producing totally different products.
D) Few firms producing identical products.

Answer 1

Monopolistic competition refers to a market where many firms sell differentiated products. Many firms are producing similar but not identical products.

Step-by-step explanation:

Monopolistic competition refers to a market where many firms sell differentiated products. Differentiated products can arise from characteristics of the good or service, location from which the product is sold, intangible aspects of the product, and perceptions of the product. This means that in a monopolistically competitive market, many firms are producing similar but not identical products. Therefore, option B, many firms producing similar but not identical products, is the correct answer.