Which of the following supports the contention that monopolistic competitors have a strong incentive to engage in R&D?
A)Entry to monopolistic competitive industries is relatively easy, and thus profit from innovation is quickly competed away.
B)Most monopolistic competitive industries are decreasing-cost industries.
C)The desire to differentiate products from competitors may motivate monopolistic competitors to engage in R&D.
D)Monopolistic competitors have large retained earnings that are available to finance R&D.

Question

Quizplus · Accepted Answer

Monopolistic competitors differentiate their products to gain a competitive edge, and R&D is a key strategy for achieving this differentiation. This drives innovation and helps firms stand out in the market.

Which of the Following Supports the Contention That Monopolistic Competitors