Pricing in a Monopolistic Competition Market
In monopolistic competition, businesses are price makers and are therefore able to choose their own pricing strategy.
Here are some of the strategies they can choose:
Cost plus pricing
adding a percentage (%) to the cost of producing the commodity or providing the service.
Competitive pricing
setting the same price as their competitors.
Loss Leaders - setting a price lower than its production cost in order to attract people to the point of sale in the hope that customers will buy other goods at the same time. For example, a company that sells games consoles might offer the console at a price lower than the cost of producing the console in order to entice people to buy expensive games for the console.