Question

The toothpaste aisle at a large store that sells personal care products contains many versions of toothpaste produced by a small number of sellers. This indicates that toothpaste producers are best categorized as Select the best answer below.
A. perfectly competitive firms; price gouging
B. oligopoly firms; supply restrictions
C. monopolistically competitive firms; product differentiation thru advertising
D. monopoly firms; price discrimination through group pricing schemes
E. perfectly competitive firms; brand advertising

Answer 1

Answer:

C. monopolistically competitive firms; product differentiation thru advertising

Explanation:

A monopolistic competition is when there are many firms selling differentiated products in an industry. A monopolistic has characteristics of both a monopoly and a perfect competition. the demand curve is downward sloping. it sets the price for its goods and services.

An example of monopolistic competition are restaurants  

Due to the fact that their are different versions of the same product (tooth paste), producers would have to advertise their products in order to attract customers.

Also, only one product is sold, toothpaste, but different versions of it are sold. This is referred to as product differentiation