Question

The complexity in the ability of the firms to engage in nonprice competition under the monopolistic competition market structure is attributed to:

A.) the assumption of a given product and a given level of advertising expenditure.

B.)the assumption of a given price and quality of the product.

C.)the assumption of a given marginal revenue.

D.) the assumption of a given number of competitors.

Answer 1

Since a monopolistic firm is that form of market in which there is large number of buyers and sellers and firm sells differentiated product based on quality, size, shape etc, therefore product is not homogeneous. Since firm is price maker but firm does not compete on the price but they compete in the market based on size, quantity quality etc.

Hence it can be said that The complexity in the ability of the firms to engage in non-price competition under the monopolistic competition market structure is attributed to the assumption of a given price and quality of the product.

Hence option b is the correct answer.

B.)the assumption of a given price and quality of the product.