Question

The feature of a monopolistic firm is he ______________.

• A. cannot determine the price, which is determined by consumer demand.
• B. will never sell a product whose demand is inelastic at the quantity sold
• C. cannot sell additional quantity unless it raises the prices on each unit
• D. None of the above

Answer 1

Answer: (B)

will never sell a product whose demand is inelastic at the quantity sold

Monopolistic competition is a market structure where there are large number of sellers selling differentiated products. There is also no barriers to entry. Every body can fix the price as per their choice. But to sell product on a large scale, they focus on advertisement, discounts.etc Hence, to earn profits, a monopolistic firm will never sell a product whose demand is inelastic at the quantity sold.