A firm in a monopolistically competitive market is similar to a monopolist in the sense that it

Question

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A firm in a monopolistically competitive market has some market power and can set its price above marginal cost, leading to a downward-sloping demand curve. However, unlike a monopolist, there are few barriers to entry and the firm faces competition from other firms producing similar products. Therefore, a) and d) are incorrect as there are no significant barriers to entry and the firm is not the only seller in the market. c) is also incorrect as there may be some barriers to entry, but they are not as significant as those in a monopolist market.

A Firm in a Monopolistically Competitive Market Is Similar to a Monopolist