Question

Monopolistic competition refers to the market structure in which there:

• A. Are many buyers in the market
• B. Are many sellers in the market
• C. Are many producers producing goods which are close substitutes of one another
• D. Is single seller in the market

Answer 1

Answer: (C)

Are many producers producing goods which are close substitutes of one another

Monopolistic competition is a situation where there is a large number of firms selling closely related products. There are also restrictions on entry and exit of firms. Hence, monopolistic competition refers to the market structure in which there are many producers producing goods which are close substitutes for one another.