Asked by Ahmad Ahmadzai on Apr 25, 2024

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Monopolistically competitive firms can use product differentiation to do which of the following?

A) guarantee long-run profitability
B) block entry of all other firms
C) provide consumers with commitment devices
D) gain complete control over the price of their product

Product Differentiation

The approach of identifying unique aspects of a product or service to elevate its allure to a certain target demographic.

Long-Run Profitability

The sustained ability of a firm to generate profits over a prolonged period, taking into account both fixed and variable costs.

  • Determine the tactics deployed by monopolistically competitive entities to secure market influence and individualize their products.
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LB
Louisa BovenApr 26, 2024
Final Answer :
C
Explanation :
Product differentiation in monopolistic competition allows firms to create unique products or services, which can include features that act as commitment devices for consumers. These commitment devices can help consumers stick to their preferences or consumption plans, enhancing customer loyalty and potentially allowing firms to maintain a certain level of demand for their differentiated product. The other options (A, B, D) are not accurate descriptions of the outcomes of product differentiation in monopolistically competitive markets.