Which market structure represents the majority of American businesses?

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

Answer: (B)

Verified step by step guidance

1. Understand the characteristics of each market structure: Perfect competition involves many small firms selling identical products; monopolistic competition has many firms selling differentiated products; oligopoly consists of a few large firms dominating the market; monopoly is a single firm controlling the entire market.
2. Recall that the majority of American businesses are small firms operating in markets with many competitors and differentiated products, which aligns with the features of monopolistic competition.
3. Recognize that perfect competition is more of a theoretical benchmark with many firms selling identical products, which is less common in the real world, especially in the U.S. economy.
4. Consider that monopolies and oligopolies exist but represent fewer businesses compared to the numerous small and medium-sized firms in monopolistic competition.
5. Conclude that the market structure representing the majority of American businesses is monopolistic competition, due to the prevalence of many firms offering differentiated products.