In monopolistic competition firms achieve some degree of market power ?
Correct answer: A. by producing differentiated products
- A. by producing differentiated products
- B. because of barriers to exit from the industry
- C. by virtue of size alone
- D. because of barriers to entry into the industry
Explanation
Product differentiation gives each firm a somewhat distinct product, allowing it to raise price without losing every customer. Barriers to entry are characteristic of monopoly, not the main source of market power in monopolistic competition.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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