Question

The highest degree of product differentiation is found in which of the following type of market structure?

oligopoly
monopolistic competition
perfect competition
monopoly

Answer 1

The highest degree of product differentiation is found in **monopolistic competition**. In this market structure, many firms sell products that are similar but not identical, leading to significant differentiation based on features, quality, branding, and customer service. This contrasts with perfect competition, where products are homogeneous, and oligopoly and monopoly, where differentiation is typically less pronounced.