As a firm in monopolistic competition sets the price for its product,the firm faces a tradeoff between
A) supply and demand.
B) efficiency and equity.
C) internal and external economies of scale.
D) price and the quantity it can sell.
E) its marginal revenue and its price.

Question

Quizplus · Accepted Answer

In monopolistic competition, firms face a trade-off between the price they set and the quantity of the product they can sell. Higher prices may lead to lower quantities sold due to the availability of close substitutes, while lower prices might increase quantities sold but reduce the price margin.

As a Firm in Monopolistic Competition Sets the Price for Its