Unlike perfectly competitive markets,monopolistically competitive markets _____.

Question

Quizplus · Accepted Answer

Monopolistically competitive markets produce differentiated products, which means that each firm has some degree of market power and can charge a slightly higher price for their product. This leads to a downward sloping demand curve for each firm, but there are still many firms in the market and entry and exit is relatively easy, so significant barriers to entry do not exist. Additionally, firms in monopolistically competitive markets do not face declining average costs at all levels of output and may not operate under economies of scale as they do not produce identical products.

Unlike Perfectly Competitive Markets,monopolistically Competitive Markets _____