Final answer:
A firm in monopolistic competition has more control over its pricing when it successfully differentiates its product, leading to less price sensitivity among consumers and a less elastic demand curve.
Step-by-step explanation:
A firm in monopolistic competition tends to have more control over price when it is more successful at differentiating its product. This is because the demand curve for monopolistically competitive firms is downward-sloping; they can raise prices without losing all their customers due to brand loyalty and product uniqueness. The more a firm can differentiate its product from those of competitors, the less elastic its demand curve becomes, enabling it to maintain sales despite price increases.
Differentiation makes a company's goods less substitutable and more unique in the eyes of consumers, which diminishes their sensitivity to price changes. This unique positioning reduces the customer's inclination to switch to competitors when prices increase, compared to a scenario where products are seen as interchangeable.
Moreover, entry barriers such as unique recipes, locations, or technologies can help maintain these advantages over time, though they must be vigilant against new entrants looking to replicate their success.