Which of the following is always associated with monopolistic competition?
A) identical products
B) economic profits in the short run
C) a demand curve that lies below the marginal revenue curve
D) demand curves that shift left as new entry occurs
E) product differentiation

Question

Quizplus · Accepted Answer

Product differentiation is a key feature of monopolistic competition, where firms produce similar but not identical products and use advertising and other strategies to make their products appear distinct to consumers. The other options are not necessarily associated with monopolistic competition. Option A is associated with perfect competition, Option B may or may not be true depending on the specific market conditions, Option C is associated with a monopolist, and Option D is associated with a market with low barriers to entry, which may include perfect and monopolistic competition, but is not definitive of monopolistic competition alone.

Which of the Following Is Always Associated with Monopolistic Competition