Question:
When a large number of sellers deal with heterogeneous and differentiated commodity, then it is called
When a large number of sellers deal with heterogeneous and differentiated commodity, then it is called
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Perfect competition = Large sellers + Homogeneous goods; Monopolistic competition = Large sellers + Differentiated/heterogeneous goods.
Updated On: Sep 15, 2026
- Perfect competition
- Monopoly
- Oligopoly
- Monopolistic competition
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The Correct Option is D
Solution and Explanation
Step 1: Understanding the Concept:
Market structures are classified by the number of market participants and the degree of product differentiation.
Step 2: Detailed Explanation:
Monopolistic competition (conceptualized by Edward Chamberlin) is characterized by:
1. A large number of independent buyers and sellers.
2. Product differentiation (heterogeneous goods that are close but imperfect substitutes differentiated by brand, packaging, or features).
3. Free entry and exit of firms in the long run.
In perfect competition, products are homogeneous; in monopoly, there is a single seller.
Step 3: Final Answer:
Hence, this market form is called monopolistic competition.
Market structures are classified by the number of market participants and the degree of product differentiation.
Step 2: Detailed Explanation:
Monopolistic competition (conceptualized by Edward Chamberlin) is characterized by:
1. A large number of independent buyers and sellers.
2. Product differentiation (heterogeneous goods that are close but imperfect substitutes differentiated by brand, packaging, or features).
3. Free entry and exit of firms in the long run.
In perfect competition, products are homogeneous; in monopoly, there is a single seller.
Step 3: Final Answer:
Hence, this market form is called monopolistic competition.
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