The decision to undertake product development in monopolistic competition is made by comparing the

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In monopolistic competition, firms aim to differentiate their products in order to gain market power and charge a higher price. However, product development costs money, so firms must weigh the potential benefits of increased sales and profits against the costs of researching and developing new products. This is done by comparing the marginal benefit (the additional revenue generated by the new product) to the marginal cost (the additional cost of developing and producing the new product). If the marginal benefit exceeds the marginal cost, then it is worthwhile for the firm to undertake product development.

The Decision to Undertake Product Development in Monopolistic Competition Is