In monopolistic competition,a firm
A)Uses marginal cost pricing.
B)Uses nonprice competition.
C)Faces a horizontal demand curve.
D)Has no market power.

Question

Quizplus · Accepted Answer

In monopolistic competition, firms rely heavily on nonprice competition, such as advertising, product differentiation, and customer service, to attract customers rather than setting prices based on marginal costs. While firms in monopolistic competition have some degree of market power due to product differentiation, they face a downward-sloping demand curve rather than a perfectly elastic horizontal curve.

In Monopolistic Competition,a Firm