In a monopolistically competitive market structure, each firm sells a good that is:[Fill in the blank]

Question

BlackTom AI · Accepted Answer

In monopolistic competition each firm faces a downward-sloping demand curve because its product is differentiated from rivals’ products.

1) Relevant knowledge points and concepts
- Monopolistic competition: many firms, free entry and exit, and product differentiation. 
- Product differentiation gives each firm some market power (ability to set price above marginal cost). 
- Long-run outcome: zero economic profit due to free entry, but firms do not produce at minimum average cost (they have excess capacity). 
- Perfect competition, by contrast, has identical (homogeneous) products and firms produce at minimum average cost in the long run.

2) Step-by-step reasoning
- If goods are slightly different, consumers view each firm’s product as not a perfect substitute, so each firm faces a downward-sloping demand curve and can set price above marginal cost. 
- That condition (differentiation + many sellers) is the defining feature of monopolistic competition.
- Because firms have market power, they do not produce where average cost is minimized; instead they produce less than the efficient scale (excess capacity).

3) Calculations / intermediate steps
- No numerical calculation is required for this conceptual question. The logical deduction is: product differentiation → downward-sloping demand → market power → characteristic of monopolistic competition.

4) Why the correct answer is correct
- Option (a) exactly states product differentiation: "slightly different from goods sold by other firms," which matches the defining feature of monopolistic competition.

5) Why other options are incorrect
- (b) “produced at minimum average cost” is false: monopolistically competitive firms typically do not produce at minimum average cost (they have excess capacity). 
- (c) “identical to other goods” describes perfect competition, not monopolistic competition. 
- (d) “produced at minimum marginal cost” is not a standard efficiency condition and is incorrect here; firms set price above marginal cost due to market power.

6) Conclusion
Therefore the correct choice is (a) slightly different from goods sold by other firms, which matches the provided answer.

In a monopolistically competitive market structure, each firm sells a good that is:[Fill in the blank]单项选择题

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