Compared to the outcome under a marginal cost pricing strategy,a monopolistically competitive firm will produce a
A)Lower output and charge a higher price.
B)Greater output and charge a higher price.
C)Lower output and charge a lower price.

Question

Quizplus · Accepted Answer

Monopolistically competitive firms have some degree of market power and are able to charge a price that exceeds their marginal cost. This means that they will produce less than the efficient level of output and charge a higher price than under a marginal cost pricing strategy.

Compared to the Outcome Under a Marginal Cost Pricing Strategy,a