Question

Which of the following is the best example of a firm operating in a monopolistically competitive market?

a Nebraska corn farmer

Applebee’s, a casual dining restaurant*

the U.S. Postal Service

Chevron, a gasoline station

electric companies prior to deregulation

Answer 1

Apple bee casual dining restaurent is the best example of firm operating in monopolistically competitive market because in monopolistic competition each firm has their indepent decisions on price and output of the product. In restaurant business the people can check for best restaurant but once they checked in they have to pay the price of the product of what the retaurant fixes and they cannot fully rate the product until it is served and they eat. In this market they can eneter and leave whenever they want. These are firms are small business under monopolistic competition where the firm owners fix the prices depending on their profit maximization.

So from the above Apple bees casual dining restaurant have been able to meet the required inputs of a monopolistic competition.