Question

Which scenario BEST represents monopolistic competition?

Answer 1

C. A family decides to stay at specific hotel on vacation because it has a swimming pool with a slide.

Answer 2

The example that best represents a monopolistic competition is option D) “A company wins a contract to be the sole provider of phone and cable television service for a city.”

Monopolistic competition always refers to a company offering a service and has no other companies to compete with. In this case, consumers cannot choose among different providers of the same service.  

Options A and B are incorrect since in the examples there are companies and chains competing one another in a given area.  

Option C is also incorrect since a family is making a decision based on the facilities offered by a hotel which does not mean that there are no other hotels in the vacation area they chose.