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Generate QuizWhich of the following is a defining characteristic of 'Monopolistic Competition'?
- A single seller with absolute control over pricing
- A few large firms engaged in fierce strategic rivalry
- Many sellers offering differentiated but substitutable products
- Homogeneous products and perfect information
Answer: Many sellers offering differentiated but substitutable products
Monopolistic competition blends elements of both perfect competition and monopoly. There are many buyers and sellers (like restaurants or soap brands), but firms differentiate their products through branding, quality, or features. This product differentiation gives each firm a slight degree of monopoly power to set prices within a narrow range.