In the 1920s and 1930s, economists became increasingly aware that there were industries that did not fit the model of perfect competition or pure monopoly. Two separate theories of monopolistic competition resulted. Edward Chamberlin of Harvard published the Theory of Monopolistic Competition in 1933. Chamberlin defined monopolistic competition as:

a. a relatively small number of producers offering similar but differentiated products.

b. a relatively large number of producers offering similar but differentiated products.

c. a market situation in which a large number of firms produce identical products.

. a market situation in which a small number of firms produce similar products.

Answer:b. a relatively large number of producers offering similar but differentiated products.

Explanation:

What is Monopolistic Competition?

Monopolistic competition refers to all those industries that offer similar items but which are not the substitute of each other. It is easy to get into this type of industry as much as it is also easy to leave the industry and they don't affect each other in any direct way. It is more related to brand differentiation because one can only tell them apart from the brand names.

They rely more on heavy advertising

The examples of monopolistic competitors are restaurants, clothing shops, electronics shops and hair salons. The only thing that can make each survive is to try make some distinct features on their product which can set them apart from other similar products or services.