Economics Supply And Demand Questions
Monopolistic competition is a market structure characterized by a large number of firms that produce differentiated products. In this type of market, each firm has some degree of market power, meaning they can influence the price of their product. However, due to the presence of close substitutes, firms in monopolistic competition face competition from other firms in terms of product differentiation, branding, and marketing strategies. This competition leads to a downward-sloping demand curve for each firm, as consumers have preferences for specific product attributes. Overall, monopolistic competition combines elements of both monopoly and perfect competition, as firms have some control over price but face competition from similar products.