Monopolistic competition refers to a market where many firms sell differentiated products. A profit-maximizing monopolistic competitor will seek out the quantity where marginal revenue is equal to marginal cost.

Differentiated products can arise from characteristics of the good or service, location from which the firm sells the product, intangible aspects of the product, and perceptions of the product The perceived demand curve for a monopolistically competitive firm is downward-sloping, which shows that it is a price maker and chooses a combination of price and quantity.

oligopoly — when a few large firms have all or most of the sales in an industry. monopolistic competition — many firms competing to sell similar but differentiated products. monopolistically competitive industry — earning economic profits, the industry will attract entry until profits are driven down to zero in the long run. monopolistically competitive firm — downward-sloping, which shows that it is a price maker and chooses a combination of price and quantity.