In monopolistic competition, how does product differentiation and advertising affect consumer choices and market dynamics?(1 point)

Question

Responses

They seek to become a monopoly by eliminating consumer choice.
They seek to become a monopoly by eliminating consumer choice.

They provide more choices and influence consumer decision making.
They provide more choices and influence consumer decision making.

They create barriers to entry, promoting a more oligopoly market structure.
They create barriers to entry, promoting a more oligopoly market structure.

They lead to perfect (pure) competition by ensuring uniformity in product offerings.

Answer 1

The correct response is:

They provide more choices and influence consumer decision making.

In monopolistic competition, product differentiation allows firms to offer varied products that cater to different consumer preferences, while advertising helps to communicate these differences and persuade consumers. This dynamic leads to increased choices for consumers and affects their purchasing decisions, shaping market behavior.