If a monopolistically competitive firm raises its price,it will
A)Not lose any of its customers.
B)Lose most of its customers.
C)Lose some of its customers,but nowhere close to all its customers.

Question

Quizplus · Accepted Answer

Monopolistically competitive firms face competition from other firms producing similar products, therefore customers have alternatives. When the price of the good increases, customers will be more likely to switch to another competitor who is offering a similar product for a lower price. However, because the product is somewhat differentiated, the firm will not lose all of its customers but only some of them.

If a Monopolistically Competitive Firm Raises Its Price,it Will