A monopolistic competitor will lose some, but not all, of its buyers when it raises its price by a small amount. The ability to keep some buyers is mainly due to:
A) the antitrust laws.
B) product differentiation.
C) barriers to entry into the market.
D) the large number of sellers in a monopolistically competitive market.

Question

Quizplus · Accepted Answer

Product differentiation allows a monopolistic competitor to maintain some of its buyers even after a price increase because consumers may remain loyal to the brand or product due to unique features, quality, or other differentiating factors. This differentiation reduces the substitutability of products, allowing firms some degree of pricing power.

A Monopolistic Competitor Will Lose Some, but Not All, of Its