What is the most important characteristic of monopolistic competition? How do firms behave differently from perfect competitors?
What will be an ideal response?
Product differentiation is the most important characteristic of perfect competition. Product differentiation generates the downward sloping demand curve that a firm faces. With heterogeneous products, monopolistic competitors will advertise and use sales promotion techniques that perfect competitors would not use.
You might also like to view...
The Fed buys securities and gives the bank a check for the amount. After the check has cleared,
A) reserves remain unchanged because the increase of reserves at the bank are offset by an increase in reserves at the Fed. B) reserves have decreased by the amount of the check because the Fed pays for the check by decreasing the bank's deposits at the Fed. C) reserves have increased by the amount of the check because the Fed pays for the check by increasing the amount of the bank's deposits with the Fed. D) reserves have increased by the amount of the reserves multiplied by the required reserve ratio, and the quantity of money increases by the difference between the amount of the check and the increase in the reserves.
Suppose that installing an overhead pedestrian walkway would cost a college town $150,000 . The walkway is expected to reduce the risk of fatality by 3 percent, and the cost of a human life is estimated at $10 million. The town should
a. install the walkway because the estimated benefit is twice the cost. b. install the walkway because the estimated benefit equals the cost. c. not install the walkway, since the cost is twice the estimated benefit. d. install the walkway, since the cost of even a single life is too great not to take action.
A competitive, profit-maximizing firm hires labor up to the point at which the wage is equal to the __________
Fill in the blank(s) with correct word
Based on the circular flow diagram, what two entities pay wages to households?
a. rest of the world and financial markets
b. government and financial markets
c. firms and government
d. firms and financial markets