question
Monopolistic competition is a market structure in which
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a large number of firms compete
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firms in monopolistic competition determine the profit-maximizing level of output by producing
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where marginal revenue equals marginal cost
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Monopolistic competition in the long-run:
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has NO profit
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in the long-run, monopolistically competitive firms have excess capacity because
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they produce less than the quantity at which average cost is the lowest
question
which of the following statements are true of monopolistic competition
answer
-firms receive zero economic profits in the long-run
-market prices are higher and output is lower than under perfect competition
-market prices are higher and output is lower than under perfect competition
question
in monopolistic competition, each firm supplies a small part of the market. This occurs because:
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there are a large number of firms
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if a monopolistically competitive seller's marginal cost is $3.56, the firm will decrease its output if:
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It's marginal revenue is less than $3.56
question
A firm faces a large number of competitors. This firm is competing in:
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-monopolistic competition
-perfect competition
-perfect competition
question
the effects of advertising are complicated. The two possible results of advertising are:
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-advertising INCREASES competition and REDUCES prices
-Advertising REDUCES competition and INCREASES prices
-Advertising REDUCES competition and INCREASES prices
question
which of the following is a possible outcome of advertising?
answer
barriers of entry are created
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