How is monopolistic competition like perfect competition? How is it like monopoly?
What will be an ideal response?
Monopolistic competition is like perfect competition in that there are many buyers and sellers and it is easy for firms to enter and exit the industry. But it is like monopoly in that firms face downward sloping demand curves. The demand curves slope down because the product is not homogeneous, so the product of one firm is not a perfect substitute for the product of another firm.
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Setting price equal to marginal cost in a natural monopoly will lead to
a. excess profits for the firm. b. losses for the firm. c. zero profits for the firm. d. One cannot tell without further information.
According to consumer choice theory, rational behavior requires that consumers compare the marginal utility of each purchase with its price.
Answer the following statement true (T) or false (F)
If the economy is represented in the graph shown and is currently at point E1, then the economy must be in:
A. long-run equilibrium. B. an economic boom. C. an economic recovery. D. a recession.
Which of the following will cause a shift in the demand curve of labor?
A. a decline in the price of a complementary input B. an increase or decrease in the productivity of labor C. an increase or decrease in the demand for the product labor produces D. all of these