In monopolistic competition, firms generally sell products that are:
Correct answer: A. Differentiated but close substitutes
- A. Differentiated but close substitutes
- B. Identical with no close substitutes
- C. Controlled by a single public authority
- D. Produced under a binding price ceiling
Explanation
Monopolistic competition combines many sellers with product differentiation, such as differences in quality, design or location. Because products are close substitutes, each firm has limited pricing power.
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About Microeconomics
Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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