To maximize its profit, a monopolistically competitive firm
A)takes the price as given and chooses its quantity, just as a competitive firm does.
B)takes the price as given and chooses its quantity, just as a colluding oligopolist does.
C)chooses its quantity and price, just as a competitive firm does.
D)chooses its quantity and price, just as a monopoly does.

Question

Quizplus · Accepted Answer

A monopolistically competitive firm has some market power, which means it can set its price by choosing its quantity. Therefore, it chooses both its quantity and price, just as a monopoly does, to maximize its profit.

To Maximize Its Profit, a Monopolistically Competitive Firm