In a market characterized by monopolistic competition, . a. producers do not have to consider the reactions of rival firms. b. the many competitors will focus on product differentiation. c. everyone is a price taker. d. government often encourages consolidation to reduce the number of competitors. e. price controls may be implemented.

b. the many competitors will focus on product differentiation.

Explanation:

In monopolistic competition, firms are price takers, that is to say, the price is given by the market (by the many forces of supply and demand: that is to say, firms and consumers), and as result, firms cannot influence the price of the goods.

For this reason, the firms try to distinguish themselves from their competitors by the product differentiation strategy: they try to offer a product that is different in some way: either of higher quality, or that provides more benefit, or that is more aesthetically pleasing, and so on.

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