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The single feature that distinguishes monopolistic competition from perfect competition is that, under monopolistic competition, sellers offer:
AIdentical products to a few buyers
BDifferentiated products to many buyers
CA single product as the only seller
DCompeting products as a few sellers
Answer & Solution
Correct answer: B. Differentiated products to many buyers
1. Perfect competition has many sellers, many buyers, and identical (undifferentiated) products.
2. Monopolistic competition is stated to differ in only one respect: the many sellers offer differentiated products to many buyers.
3. Option A keeps products identical and shrinks buyers to a few, changing two things, so it is wrong.
4. Option C (a single seller with one product) describes monopoly, not monopolistic competition.
5. Option D (a few sellers with competing products) describes oligopoly, not monopolistic competition.
6. Only B isolates the single distinguishing feature, product differentiation, so B is correct.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 4 Unit I "Meaning and Types of Markets", p.4_
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