If a firm in monopolistic competition lowers its price, what will
Happen to the quantity of products it sells?
A)The quantity of products sold will increase and sales revenue will fall.
B)The quantity of products sold will decrease because this is not perfect competition.
C)The quantity of products sold will increase slightly-and in some cases not at all.
D)The quantity of products sold and sales revenues will increase as the firm lures customers from its competitors and attracts
New customers.

Question

Quizplus · Accepted Answer

In monopolistic competition, firms have some degree of market power due to product differentiation. Lowering prices can attract customers from competitors and new customers, increasing both quantity sold and sales revenue.

If a Firm in Monopolistic Competition Lowers Its Price, What