If a monopolistically competitive firm raises prices, it will:

Question

Quizplus · Accepted Answer

In monopolistic competition, firms have some control over the price they charge because of product differentiation. If a firm raises its price, it will likely sell fewer units of output because consumers have substitutes available from other firms. However, the firm would still continue to sell some output because its product is differentiated from the competitors' products. Therefore, the best choice is D, sell less output.

If a Monopolistically Competitive Firm Raises Prices, It Will