The fact that a monopolistically competitive firm is not as efficient as a perfectly competitive firm may be outweighed by which of the following?
A) The price charged is still equal to marginal revenue.
B) Goods in a monopolistically competitive market are usually cheaper.
C) There are still many perfect substitutes.
D) Consumers are given more choice.

Question

Quizplus · Accepted Answer

While a monopolistically competitive firm may not be as efficient as a perfectly competitive firm, consumers are given more choice in a monopolistically competitive market. This can lead to greater satisfaction for consumers, as they are able to choose from a wider range of products that may better fit their preferences. Ultimately, consumer preference and satisfaction may outweigh the efficiency concerns in a monopolistically competitive market.

The Fact That a Monopolistically Competitive Firm Is Not as Efficient