Question

Select the correct answer.
Mia and Jack are two chocolate producers. Mia packs her chocolates in attractive boxes and charges slightly more than Jack does. Despite her slightly higher prices, consumers are more attracted to Mia’s chocolates. What market structure does this situation represent?
A.
oligopoly
B.
monopolistic competition
C.
monopoly
D.
perfect competition

Answer 1

The above situation represents a Monopolistic competition market structure.

• Monopolistic competition is imperfect competition. In this competition, producers sell their products that are contrasted from another that's why those are not perfect substitutes.

• In this market structure, the impact of the decision made by a single person is spread adequately across the whole group.

• Monopolistic competition depends on product branding and quality.

• Monopolistic competition firms are able to gain a greater degree of market share and result.