Firms in a monopolistically competitive industry have no reason to engage in nonprice competition because their products are uniquely different from other sellers in the market.

Question

Quizplus · Accepted Answer

Even though firms in a monopolistically competitive industry offer differentiated products, they still engage in nonprice competition (such as advertising, brand promotion, and product improvement) to increase demand for their specific product and gain a competitive edge over others.

Firms in a Monopolistically Competitive Industry Have No Reason to Engage