Question

A monopolistically competitive firm chooses A. price, but output is determined by a cartel production quota.B. the price, but competition in the market determines the quantity.C. the quantity of output to produce and the price at which it will sell its output.D. the quantity of output to produce, but the market determines price.

Answer 1

Answer:

The answer is C.

Explanation:

Monopolistic Competition is at the borderline of both perfect competition and monopoly i.e it shares both characteristics.

It is similar with monopoly in setting the price of its product because of product differentiation which is a key in monopolistic market.

It is also similar with perfect competition because it determines the output to produce. No restrictions. There are also large numbers of buyers and sellers. Its revenue depends on the volume of outputs it can produce.