How are the products sold by a monopolistically competitive firm different from the products sold in a competitive market?
What will be an ideal response?
In a competitive market, the products sold by each producer are identical to the products sold by other firms. In other words, the products sold in a competitive market are homogeneous and are perfect substitutes for each other. However, in a monopolistically competitive market, the products are differentiated. The products are close substitutes but are not identical.
You might also like to view...
In which of the following situations might you expect expansionary monetary policy to reduce the unemployment rate?
A) if changes in monetary policy are unanticipated B) if expectations are rational C) if actual inflation is lower than expected D) if actual inflation is higher than expected
As of 2013, the debt of the U.S. government amounted to roughly ________ per person
A) $50,000 B) $8 million C) $500,000 D) $800
If the average cost of producing a good is increasing as a firm produces more of the good, then which of the following must be TRUE?
A) AFC is falling. B) AVC is rising. C) MC > AVC. D) All of the above.
Other things the same, a decrease in velocity means that
a. the rate at which money changes hands falls, so the price level rises. b. the rate at which money changes hands falls, so the price level falls. c. the rate at which money changes hands rises, so the price level rises. d. the rate at which money changes hands rises, so the price level falls.