A monopolistically competitive firm can increase its price without losing all its market share because
A)of product differentiation.
B)of the small number of firms in the industry.
C)the demand curve is very inelastic.
D)of the unavailability of close substitutes.
E)the products are homogeneous.

Question

Quizplus · Accepted Answer

A monopolistically competitive firm differentiates its product from its competitors, making it unique in some way. This product differentiation allows the firm to have some degree of control over its price without losing all of its market share. Customers may be willing to pay a higher price for the unique features or characteristics of the product.

A Monopolistically Competitive Firm Can Increase Its Price Without Losing