A monopolistically competitive firm can raise its price somewhat without fear of great change in unit sales because
A)The demand for its product is typically very price-elastic.
B)Its demand curve is horizontal.
C)Of product differentiation and brand loyalty.
D)Of the gap in its marginal revenue curve.

Question

Quizplus · Accepted Answer

Monopolistically competitive firms often have some degree of product differentiation and brand loyalty, which makes their customers less sensitive to price changes. This means that the firm can raise prices somewhat without losing a significant number of sales. Therefore, choice C is the correct answer.

A Monopolistically Competitive Firm Can Raise Its Price Somewhat Without