A monopolistically competitive firm, unlike a perfectly competitive firm, could increase the quantity it produces and lower the:

Question

Quizplus · Accepted Answer

A monopolistically competitive firm has some market power, allowing it to charge a price greater than its marginal cost. Therefore, it can increase quantity produced without having to lower the price as much as a perfectly competitive firm would. This means that it can spread its fixed costs over a greater quantity of output, resulting in a lower average total cost of production.

A Monopolistically Competitive Firm, Unlike a Perfectly Competitive Firm, Could