<u>The producer sets the price in a monopolistic competition.
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Further Explanation:
Monopolistic Competition:
Monopolistic competition is a type of competition where a large number of seller offer similar but not perfect substitute products. Each producer offers a different product at different price based on the exclusive characteristic of the product. Major characteristics of monopolistic competition are as follows:
• Different product
• Large number of producers
• Freedom of entry and exit
• Market power (Producer)
Setting the price in monopolistic competition:
In monopolistic competition, the producer has the power to pricing power. In this type of competition, the producers offer different products as compared to other competitors and charge the customer according to their product differentiation. Therefore, they have the power to set and change the price on the basis of their offered product.
Thus, the producer sets the price in a monopolistic competition.
Learn more:
- Learn more about the perfectly competitive market
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- Learn more about the marginal benefit
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- Learn more about the supply and demand
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Answer details:
Grade: Middle school
Subject: Economics
Chapter: Types of market
Keywords: Sets, price, monopolistic, competition, market, types of market, competition, producers, freedom of entry and exit, economics, demand, supply, customer.
