In monopolistically competitive industries:
a)competition is weak
b)there is little range of choice over the product
C)all firms are price makers
d)there are more firms than in a oligopolistic industry
The correct answer is a) competition is weak.
Monopolistically competitive industries are characterized by a large number of firms that produce differentiated products. These products are similar but not identical, so each firm has some control over the price it can charge for its product. However, because there are many firms competing in the market, no single firm has a significant market share or market power. This means that competition is relatively weak compared to perfect competition or oligopoly.
To arrive at this answer, you can consider the key traits of monopolistic competition and eliminate the answer choices that are inconsistent with those traits. For example:
- Option b) states "there is little range of choice over the product." This is incorrect because monopolistically competitive industries offer a wide range of choices and product differentiation to attract consumers.
- Option c) states "all firms are price makers." This is incorrect because while firms in monopolistic competition have some control over the price they charge, they are not price makers in the same sense as monopolies or oligopolies.
- Option d) states "there are more firms than in an oligopolistic industry." This is also incorrect because monopolistic competition typically involves a larger number of firms compared to oligopoly, but not necessarily more firms than oligopoly.
Eliminating the incorrect options will lead you to the correct answer, which is a) competition is weak.