Jack, Jamie, Ronnie, and Stephan own the only computer software manufacturing companies in the country. When Jack increases the price of his product and advertises extensively to promote it, the other three manufacturers immediately increase their prices and launch promotional strategies. What type of market structure do these four companies operate in?
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Answer:
Monopolistic Competition
Explanation:
This market structure is characterized by healthy competition among firms that produce similar but slightly differentiated products. This allows them to charge higher prices within a specific range.
Now in relation to the question, the companies are in monopolistic competition because there is a maximization of profit among all the companies which is a major characteristic of monopolistic competition.
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