Monopolistic competition is a market structure in which there are many firms selling products that are similar but not identical. For example in the market for blue jeans, there are many producers such as Mavi Jeans, Levi’s, Guess, GAP, LC Waikiki. These are all brand names. Jeans sold by these producers are differentiated according to style, quality, design, etc. Hence consumers do not perceive these brand name jeans as identical. When this is the case, price is not the only factor that determines consumers’ decisions. When consumers perceive a product as a unique product without perfect substitutes, demand facing its producer is no longer perfectly elastic (horizontal). In other words, demand is downward sloping similar to the demand curve facing a monopolist.