Because of product differentiation,a monopolistically competitive firm:
A) possesses some degree of market power.
B) is very similar to a perfectly competitive firm.
C) faces a perfectly elastic demand curve.
D) is unaffected by the elasticity of demand.

Question

Quizplus · Accepted Answer

Product differentiation allows a firm to have some market power by offering a unique product that is not completely substitutable with other firms' products. This enables the firm to sell its product at a higher price than it would be able to in a perfectly competitive market.

Because of Product Differentiation,a Monopolistically Competitive Firm