- 1 Marks
Question
Which of the following is a feature of monopolistic competition?
A. Small number of suppliers
B. Monitors the actions of the other firms
C. Faces a kinked demand curve
D. Knowledge is widespread, but not perfect
E. Decisions of one firm influence the decisions of other firms
Answer
D. Knowledge is widespread, but not perfect
Explanation:
In monopolistic competition, a feature is that while firms have some market power and can set prices, the knowledge among consumers is widespread, but not perfect. This means that while consumers are informed about the products available, they may not have complete information about all the firms’ offerings. The other options describe characteristics of different market structures, such as oligopoly or perfect competition.
- Tags: Economic theory, Market Features, Monopolistic Competition
- Level: Level 1
- Topic: The Business Environment
- Series: NOV 2020
- Uploader: Dotse