Question
What is monopolistic competition?
Answer
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(178 Votes)
Lyle
Elite · Tutor for 8 years
Answer
Monopolistic competition is a market structure in which many firms sell products that are similar but not identical, allowing them to have some control over prices and engage in product differentiation.
Explanation
Monopolistic competition is a market structure characterized by a large number of firms producing similar but not identical products. These firms have some degree of market power, which allows them to influence the prices of their products. Key features of monopolistic competition include product differentiation, freedom of entry and exit in the market, and many buyers and sellers. Because of these features, firms in monopolistic competition often engage in non-price competition, such as advertising and brand differentiation.