Monopolistically competitive firms have some market power because______ .

Question

Quizplus · Accepted Answer

Monopolistically competitive firms have some degree of market power because their products are differentiated from those of their competitors, meaning there are no perfect substitutes. This allows the firm to have some control over the price it charges and the quantity it sells. However, this market power is limited because there are still many other firms producing similar products, so consumers have some alternatives to choose from. Additionally, there are usually low barriers to entry, meaning that new firms can easily enter the market and compete with existing firms, which also limits the market power of monopolistically competitive firms.

Monopolistically Competitive Firms Have Some Market Power Because______