Why is each firm in a monopolistically competitive industry considered as a "mini" monopoly?
A)There is a large number of sellers in the market
B)Each firm in monopolistic competition is a price taker
C)The product of each firm is unique in some way or the other
D)Each firm faces a perfectly elastic demand curve
E)There exists a large number of close substitutes of the products

Question

Quizplus · Accepted Answer

In monopolistic competition, each firm produces a product that is slightly different from its competitors. This product differentiation gives each firm some degree of market power, allowing it to have control over the price of its product. Therefore, each firm in a monopolistically competitive industry is considered as a "mini" monopoly.

Why Is Each Firm in a Monopolistically Competitive Industry Considered