"It is clear from the theory of monopolistic competition that product development is not pushed to its efficient level." This statement is

Question

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In monopolistic competition, firms face a downward-sloping demand curve, meaning that to sell more, they must lower their price. This results in a situation where the price (what the consumer is willing to pay for the last unit) is higher than the marginal revenue (the additional revenue from selling one more unit), which is a characteristic of imperfect competition. This discrepancy can lead to inefficiencies in the level of product development and innovation, as firms may not have the incentive to push product development to its most efficient level if the additional revenue generated does not cover the cost.

"It Is Clear from the Theory of Monopolistic Competition That