Which type of market structure has many sellers offering differentiated products, and each seller has some control over its price?
Answer and explanation
Correct answer: D. Monopolistic competition
- Step 1: Many sellers and differentiated products point to monopolistic competition.
- Step 2: Differentiation gives each firm some price-setting power.
- Step 3: The other structures have identical products, one seller or a few sellers.
Answer
Monopolistic competition.
Why not the others: Perfect competition: In perfect competition, products are identical and firms are price takers. Monopoly: In a monopoly, there is a single seller and no close substitutes. Oligopoly: In an oligopoly, a few large firms dominate the market.
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