Monopolistic competition implies that each firm has some ability to differentiate its product.

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Monopolistic competition is a market structure where many firms sell similar but not identical products, and each firm has some ability to differentiate its product through marketing, branding, packaging, or other means. This differentiation creates a degree of market power or monopolistic power, which allows the firm to charge a slightly higher price than its competitors. However, the market is not fully monopolized, as there are other close substitutes available that consumers can switch to if the prices are too high. Monopolistic competition is characterized by many firms that produce differentiated products. Each firm has some degree of control over its own price due to product differentiation.

Monopolistic Competition Implies That Each Firm Has Some Ability to Differentiate