Describe the characteristics of a monopolistically competitive industry.
What will be an ideal response?
Monopolistically competitive industries have low concentration ratios, and there are low barriers to entry into the industry. The firms in these industries have some market power, and there is relative independence between each firm so that modest changes in the output or price of any single firm will have no perceptible influence on the sales of any other firm.
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What will happen to the equilibrium price and quantity of cars if there is an increase in the price of gasoline?
What will be an ideal response?
Firms still have the incentive to cheat even after a game leads to cooperation
Indicate whether the statement is true or false
As a company adds the first four workers to its production process in the short run, its output rises from 0 to 12 to 25 to 35 to 43 . Addition of the fifth worker will most likely lead to an output rate
a. greater than 51. b. equal to 51. c. less than 51. d. greater than 51 if the firm experiences diseconomies of scale. e. none of the above.
Figure 10-7
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Which of the diagrams in Figure 10-7 represents a decrease in consumer spending combined with a positive supply shock?
A. (A) and (B) B. (C) and (D) C. (A) and (C) D. (B) and (D)