Question

Which of the following markets isbestdescribed as monopolistically competitive? A.Toothpaste B.Milk C.Electricity D.Apples

Which of the following markets isbestdescribed as monopolistically competitive?

A.Toothpaste

B.Milk

C.Electricity

D.Apples

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Answer #1

A) Toothpaste

Monopolistic competition refers to a market situation in which there are large number of buyers and sellers. The sellers sell closely related or differentiated products but not identical product. The products are close substitutes of each other. Product differentiation is the most important feature of monopolistic competition. Each firm under monopolistic competition enjoys the monopoly over the brand of the commodity and thus the firm has the control over the price of the commodity.

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