Question

15) A monopolistically competitive firm will a. have some control over its price because its product is differentiated. b. always produce at the minimum efficient scale of production. c. charge the same price as its competitors do. d. produce an output level that is productively and allocatively efficient.

Answer 1

Monopolistic competition is a type of market structure in which

• products are closely related in terms of Shape size color
• There are no barriers to entry and exit
• They have some control over the price

So according to the question, the monopolistic competitive firm will have some control over the price because they have a slight difference in their products and that's why they promote their products differently in terms of advertisement branding, etc

For example, ln toothpaste market there are Colgate, close up, Pepsodent, etc. All have the same compound but they are different in terms of packaging color size, etc

So the answer is an option A