In a monopolistically competitive market, _____.

Question

Quizplus · Accepted Answer

In a monopolistically competitive market, firms tend to differentiate their products from their competitors in order to create brand loyalty and build a customer base. This allows for some degree of pricing power, as consumers may be willing to pay slightly more for a product that they perceive as unique or of higher quality. However, the market is not dominated by a single firm, and there are relatively low barriers to entry, meaning that new firms can enter the market and compete on their own differentiated products. Therefore, firms in this market cannot be considered price takers, and there is no guarantee of economic profits in the long run.

In a Monopolistically Competitive Market, _____