Question

What kind of market is market for biscuits?

• A. Monopoly
• B. Monopolistic competition
• C. Oligopoly
• D. Perfect competition

Hint:

Monopolistic competition is characterized by many firms offering differentiated products in a competitive market.

Answer 1

The Correct Option is B

Step 1: Understanding market types.
Monopolistic competition is a market structure in which many firms sell similar but not identical products. The market for biscuits typically falls under this category, as there are many brands offering a variety of biscuits with slightly different characteristics.

Step 2: Analyzing the options.
(A) Monopoly: This is incorrect, as a monopoly is a market with a single supplier, which does not apply to the biscuit market.
(B) Monopolistic competition: Correct. The biscuit market is characterized by many firms offering differentiated products, which is the essence of monopolistic competition.
(C) Oligopoly: This is incorrect, as an oligopoly is a market dominated by a few firms, which is not the case for biscuits.
(D) Perfect competition: This is incorrect, as perfect competition implies identical products, which does not apply to biscuits.

Step 3: Conclusion.
The correct answer is (B) Monopolistic competition, as the biscuit market consists of many firms offering differentiated products.