Product differentiation in a monopolistically competitive market may allow the seller to raise its price and not lose all of its buyers.

Question

Quizplus · Accepted Answer

In a monopolistically competitive market, product differentiation allows firms to make their products appear unique, which can give them some degree of market power. This enables them to raise prices without losing all their customers, as consumers may prefer the differentiated product over others for various reasons (e.g., quality, brand, features).

Product Differentiation in a Monopolistically Competitive Market May Allow the Seller