Why do firms operating in a monopolistically competitive industry have the power to raise the prices of their products or services?
A) The competition in the industry is insignificant.
B) The number of buyers in the industry is small.
C) The firms can differentiate their product offerings.
D) The entry barriers in the industry are extremely high.

Question

Quizplus · Accepted Answer

In a monopolistically competitive industry, managers selling a product with unique features tend to have some ability to raise prices. When a firm is able to differentiate its product or service offerings, it carves out a niche in the market in which it has some degree of monopoly power over pricing, thus the name "monopolistic competition."

Why Do Firms Operating in a Monopolistically Competitive Industry Have