Skip to content

CSEET · Economic and Business Environment · Basics of Demand and Supply and Forms of Market Competition

Which feature is common to firms operating under monopolistic competition?

Under monopolistic competition many sellers offer differentiated but close substitute products. Each firm has some control over price because of brand differences, yet competition from many rivals limits it. Single seller, few sellers or homogeneous price-taking descriptions fit monopoly, oligopoly and perfect competition instead.

  1. AA single seller controls the entire market with no close substitutes
  2. BMany sellers offer differentiated but closely related productsCorrect
  3. CA few large sellers produce an identical product
  4. DSellers are price takers selling a homogeneous product

Explanation

Monopolistic competition has many sellers whose products are differentiated (by brand, packaging, quality) yet are close substitutes. A single seller describes monopoly, a few large sellers describes oligopoly, and price-taking with homogeneous goods describes perfect competition.

Did you get it right without looking?

One question tells you little. A timed set on Basics of Demand and Supply and Forms of Market Competition shows your real accuracy, how long you take and where you lose marks.

Practise Basics of Demand and Supply and Forms of Market CompetitionFree diagnostic mock

More Basics of Demand and Supply and Forms of Market Competition questions