Because there are many firms in monopolistic competition markets,
A)everyone is a price taker.
B)producers do not have to consider the reactions of rival firms.
C)government often encourages consolidation to reduce the number of competitors.
D)price controls may be implemented.
E)the many competitors will focus on product differentiation.

Question

Quizplus · Accepted Answer

In monopolistic competition markets, firms differentiate their products to appeal to specific customer groups. This means that there is competition based on product features rather than price, which allows for a larger number of firms to coexist in the market. Therefore, the many competitors will focus on product differentiation.

Because There Are Many Firms in Monopolistic Competition Markets