The correct answer is: A. Monopolistic competition.
Monopolistic competition is a market structure in which many firms sell products that are similar but not identical. This means that each firm has some control over its price, but it also faces competition from other firms selling similar products. As a result, firms in monopolistic competition tend to earn a normal profit in the long run.
Monopolistic competition is often contrasted with perfect competition, in which there are many firms selling identical products and firms have no control over price. In perfect competition, firms earn zero economic profit in the long run.
Monopolistic competition is also often contrasted with monopoly, in which there is only one firm selling a product. In monopoly, the firm has complete control over price and can earn an economic profit in the long run.
Here is a brief explanation of each option:
- A. Monopolistic competition: A market structure in which many firms sell products that are similar but not identical.
- B. Monopoly: A market structure in which there is only one firm selling a product.
- C. Perfect competition: A market structure in which there are many firms selling identical products and firms have no control over price.
- D. Oligopoly: A market structure in which there are a few firms selling products that are either identical or similar.