Monopolistic competition means:

A) a market situation where competition is based entirely on product differentiation and advertising.
B) a large number of firms producing a standardized or homogeneous product.
C) many firms producing differentiated products.
D) a few firms producing a standardized or homogeneous product.

Monopolistic competition refers to a market situation where there are many firms producing differentiated products. In this type of competition, each firm tries to differentiate its product by adding some unique features or characteristics, such as packaging, after-sales services, etc. Advertising and marketing efforts are also significant in this market situation. Therefore, option C is the correct answer. Option A describes a situation of pure competition, option B describes a situation of perfect competition, and option D describes a situation of an oligopoly.