Question

Which statement about monopolistic competition is most accurate?

Options

• One seller produces a unique product with no close substitute.

• Many sellers offer differentiated products and use selling costs like advertising.

• Few big sellers produce a homogeneous product and rarely advertise.

• One big buyer decides the price for all sellers.

Answer 1

Many sellers offer differentiated products and use selling costs like advertising.

Explanation: 

Monopolistic competition has many sellers selling similar but differentiated products, and firms rely heavily on selling costs such as branding and advertising.