The theory of monopolistic competition implies that although product variety is desirable, it has its costs.

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The theory of monopolistic competition suggests that firms differentiate their products in order to capture a larger market share, but this product differentiation comes with costs such as increased advertising expenditures and research and development expenses. These costs can lead to higher prices for consumers and decrease overall welfare. Therefore, although product variety is desirable, it also has its costs.

The Theory of Monopolistic Competition Implies That Although Product Variety