Question

If a monopolistically competitive firm raises its price, it a. loses all of its customers (sales drop to zero) as your answer loses all of its customers (sales drop to zero) b. gains customers (sales increase) as your answer gains customers (sales increase) c. loses some, but not all, of its customers as your answer loses some, but not all, of its customers d. loses no customers at all as your answer loses no customers at all e. loses very few customers as your answer loses very few customers

Answer 1

Answer:

c. loses some, but not all, of its customers as your answer loses some, but not all, of its customers

Explanation:

In a monopolistically competitive product is a product that has competition in the market, but that are not quite the same product, meaning they can´t be exactly replaced by a cheaper or different brand, when a company like that rises its prices, it eventually ends up loosing some clients, but not all, because of the loyal clients and those that can´t or won´t change brands, a good example of a monopolistically competitive firm, would be Apple, which has a loyal base of costumers that eventhough prices of apple products have been rising are still loyal, they are loosing some customers to other brands but not all of them.