A monopolistically competitive firm has some degree of market power because

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A monopolistically competitive firm sells a differentiated product, giving it some degree of market power. This means it can charge a slightly higher price than its competitors without losing all of its customers. However, this market power is limited by the fact that there are close substitutes available, and consumers can switch to a similar product if the price is too high. Natural barriers to entry may exist, but they do not necessarily give the firm market power. The firm may not always make positive profits, especially in the long run when other firms may enter the market and compete away profits. Legal barriers to entry may give the firm temporary market power, but this is not a characteristic of monopolistic competition. The number of firms in the industry may vary, but it is not a defining characteristic of monopolistic competition.

A Monopolistically Competitive Firm Has Some Degree of Market Power