A Monopolistically Competitive Firm Can Increase Its Price Without Losing

question 127

Multiple Choice

A monopolistically competitive firm can increase its price without losing all its market share because

• A)of product differentiation.
• B)of the small number of firms in the industry.
• C)the demand curve is very inelastic.
• D)of the unavailability of close substitutes.
• E)the products are homogeneous.

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Definitions:

Trade Discounts

Reductions in price given by sellers to buyers in the business-to-business market.

Manufacturer

An entity engaged in the process of producing goods for sale by using raw materials, labor, and machinery.

Snowboard

A board used for snowboarding, a winter sport where the rider descends a slope covered with snow while standing on the board.

Seasonal Discounts

Price reductions on products or services offered during certain times of the year or specific seasons to increase sales.