A firm in monopolistic competition tends to have more control over price when it is Group of answer choices more successful at differentiating its product. less successful at differentiating its product. able to tie in the selling of its products. able to use predatory pricing.

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Deja Bender

Business

21 May, 05:01

A firm in monopolistic competition tends to have more control over price when it is Group of answer choices more successful at differentiating its product. less successful at differentiating its product. able to tie in the selling of its products. able to use predatory pricing.

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Santino Hurst · Answer 1

Answer A

Explanation:

Monopolistic competition is a market structure that is in the middle of monopoly and competitive market. All the firms in monopolistic competition have a low degree of market power and take prices as they are. Therefore, these firms advertise heavily as in the long run demand for their products is highly elastic, sensitive to price changes and in the short run economic profit is positive but gravitates towards zero in the long run. Any source of advantage in comparison to the competition can therefore be higher product differentiation.