Chapter 10R, Problem 21MCQ

To determine

The correct option for given situation where characteristics of monopolistic competition is required to be define.

Answer to Problem 21MCQ

Option c is correct.

Explanation of Solution

Explanation for correct option:

c.

Monopolistic competition refers to the type of market structure where manufacturer produces similar products which can be differentiated. Also, there are many firms and no barriers for new comers. Therefore, option c is correct.

Explanation for incorrect options:

a.

The products sell by the monopolistic competitors are not standardized instead they are differentiated on the basis of quality, price, etc. Therefore, option a is incorrect.

b.

In monopolistic competition, many firms can sell differentiated products in the same market unlike monopoly or oligopoly competition. Therefore, option b is incorrect.

d.

Barriers for new sellers are not at all high in monopolistic competition. Therefore, option d is also incorrect.

e.

In monopoly competition, there are one or two sellers, high barriers to enter or exit the market and differentiated products not in monopolistic competition. Therefore, option e is incorrect.

Economics Concept Introduction

Monopolistic competition: It is one of the type of market structure, where there are many firms present and products they produces are similar but differentiated.