Firms in monopolistic competition can acquire some market power by:

A) product differentiation.
B) engaging in tacit collusion.
C) producing where MR > MC.
D) increasing their output to the perfectly competitive level.

Question

Ayrrielle Lewis · Accepted Answer

Final Answer : A, Explanation :  Firms in monopolistic competition can differentiate their products to create a perceived uniqueness which gives them a certain degree of market power. This allows them to charge a higher price for their products than if they were producing in a perfectly competitive market. Engaging in tacit collusion (B) and producing where MR > MC (C) are not typically strategies used in monopolistic competition. Increasing output to the perfectly competitive level (D) would eliminate any market power the firm had through product differentiation.

Firms in monopolistic competition can acquire some market power by:

A) product differentiation.
B) engaging in tacit collusion.
C) producing where MR > MC.
D) increasing their output to the perfectly competitive level.

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Learning Objectives

Related questions

Firms in monopolistic competition can acquire some market power by:A) product differentiation.B) engaging in tacit collusion.C) producing where MR > MC.D) increasing their output to the perfectly competitive level.

Definitions

Learning Objectives

Learning Objectives

Related questions

Firms in monopolistic competition can acquire some market power by:

A) product differentiation.
B) engaging in tacit collusion.
C) producing where MR > MC.
D) increasing their output to the perfectly competitive level.