Monopolistic competition and its features.
Answer to Problem 1CQQ
Option ‘b’ is the correct answer.
Explanation of Solution
Option (b):
Similar to
Option (a):
In a monopolistic competitive market, products are differentiated; that is, it sells similar (but not identical) products of its competitors. Since the statement is a feature of monopolistic market, option ‘a’ is incorrect.
Option (c):
A monopolistic competitive market can attain profit maximization both in the short run as well as the long run. Hence, option ‘c’ is incorrect.
Option (d):
Since the monopolistic market features free entry and exit of firms in the market, option ‘d’ is incorrect.
Concept introduction:
Monopolistic competition: It is an imperfect market structure in which many firms sell products that are differentiated from one another.
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Chapter 16 Solutions
Principles of Microeconomics