ECONOMICS
COMPETITION AND MARKET STRUCTURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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when many firms compete with differentiated products, gasoline
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when many firms compete with differentiated products, toothpaste
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when many firms compete with unique products, electricity
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None of the above
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Detailed explanation-1: -YES! Companies that sells goods like toothpaste, shampoo, soap, toilet paper– firms that advertise (but have basically the same product) and claim their product is superior to competitors products are monopolistically competitive firms!
Detailed explanation-2: -Colgate is a company that is practically synonymous with toothpaste, but while it used to enjoy a monopoly in India several decades ago, today it faces increasing competition from the likes of HUL, Patanjali, Dabur, P&G, many more.
Detailed explanation-3: -What Industry Is an Example of Monopolistic Competition? Monopolistic competition is present in restaurants like Burger King and McDonald’s. Both are fast food chains that target a similar market and offer similar products and services.
Detailed explanation-4: -Product Differentiation Under monopolistic competition, firms slightly differentiate their products. For example, tea bags rely on quality and brand name to differentiate, yet under a perfectly competitive market, they would be exactly the same.