A Firm in Monopolistic Competition Can Determine What Price to Charge

question 18

Multiple Choice

A firm in monopolistic competition can determine what price to charge for its product because of

• A) barriers to entry.
• B) economies of scale.
• C) product differentiation.
• D) the fact there are many buyers.

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Definitions:

Demand

The measure of products or services that consumers are eager and equipped to purchase at varying prices during an established interval.

Increase in Demand

A rise in the quantity of a good or service that consumers are willing and able to purchase at each price point.

Quantity Supplied

The quantity of a product or service that sellers are prepared and capable of offering for sale at a specific price point.

Equilibrium Price

Equilibrium Price is the price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers, leading to market stability.