Which of the Following Supports the Contention That Monopolistic Competitors

Multiple Choice

Which of the following supports the contention that monopolistic competitors have a strong incentive to engage in R&D?

A) Entry to monopolistic competitive industries is relatively easy, and thus profit from innovation is quickly competed away.
B) Most monopolistic competitive industries are decreasing-cost industries.
C) The desire to differentiate products from competitors may motivate monopolistic competitors to engage in R&D.
D) Monopolistic competitors have large retained earnings that are available to finance R&D.