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Which of the following describes a situation where monopolistic competition exists?

  • Question 5b of 10 - Market structures

  • Maximum Attempts: 1
  • Question Type: Multiple Choice
  • Maximum Score: 2
  • Question: Which of the following describes a situation where monopolistic competition exists?
  • Answers:
  1. When there is a small number of producers selling identical products.
  2. When many producers are selling slightly differentiated products.
  3. When fewer than five producers command the entire market for a certain good or service.
  4. When a single producer is the only one selling a good or service with no close substitutes.

The correct answer is: When many producers are selling slightly differentiated products. Monopolistic competition means that each producer has a monopoly on their specific product, but the products are close substitutes of each other.

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