One of the Reasons for Low Cross-Price Elasticity in Monopolistic

question 65

Multiple Choice

One of the reasons for low cross-price elasticity in monopolistic competition and high cross-price elasticity in perfect competition is that

• A) Firms in perfect competition differentiate their products.
• B) In monopolistic competition brand loyal consumers view other available products as poor substitutes.
• C) Consumers do not have perfect substitutes in perfect competition.
• D) To save money, firms in monopolistic competition do not advertise.

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