Economics Monopolistic Competition Questions
Product differentiation in monopolistic competition refers to the strategy employed by firms to make their products appear distinct or unique from those of their competitors. This can be achieved through various means such as branding, packaging, design, features, quality, and customer service. The goal of product differentiation is to create a perceived difference in the minds of consumers, allowing firms to charge higher prices and capture a larger market share. By offering differentiated products, firms in monopolistic competition can create a sense of brand loyalty and reduce price sensitivity among consumers, thereby increasing their market power and profitability.