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JAMB Economics 2004 Question 11

Question 11

Market Structures

The distinction between perfect competition and monopolistic competition is that the latter is characterized by

  1. A.a single market price
  2. B.many buyers and sellers
  3. C.product differentiation
  4. D.homogeneity of product
Show the answer and explanation

Answer: C (product differentiation)

Explanation

Both have many buyers and sellers, but in monopolistic competition each firm's product is slightly different (branded), i.e. differentiated.