In the short run, product differentiation enables firms in monopolistically competitive markets to:

Question

Quizplus · Accepted Answer

In the short run, firms in monopolistically competitive markets can earn positive economic profits due to product differentiation, which allows them to have some degree of market power and set prices above marginal cost. This is because product differentiation makes their products unique in some way, reducing direct competition and allowing for some control over pricing.

In the Short Run, Product Differentiation Enables Firms in Monopolistically