A monopolistically competitive firm's choice of output level is virtually identical to the choice made by
A)a perfectly competitive firm.
B)a duopolist.
C)a monopolist.
D)an oligopolist.

Question

Quizplus · Accepted Answer

A monopolistically competitive firm has some market power, but faces competition from other firms producing similar products. This means that the firm cannot simply choose its price, but must also consider how its output level will affect the prices and profits of its competitors. A monopolist, on the other hand, has complete control over the market and can choose its output level and price independently. Therefore, the choice of output level for a monopolistically competitive firm is more similar to that of a monopolist than of a perfectly competitive firm, duopolist, or oligopolist.

A Monopolistically Competitive Firm's Choice of Output Level Is Virtually