Which of the following statements is true?
A) A monopolist's product often has close substitutes.
B) Firms under perfect competition produce differentiated products.
C) Firms under monopolistic competition produce identical products.
D) Firms under oligopoly produce either identical or differentiated products.

Question

Quizplus · Accepted Answer

Firms under oligopoly may produce either identical products (such as in the case of a homogenous oligopoly) or differentiated products (such as in the case of a differentiated oligopoly). A monopolist's product does not have close substitutes, as there is no competition in the market. Firms under perfect competition produce identical products, as there is perfect substitutability among goods. Firms under monopolistic competition may produce differentiated products, as they try to differentiate their products from those of other firms in the market.

Which of the Following Statements Is True