Monopolistic competition resembles pure competition because:
A. both industries emphasize nonprice competition.
B. in both instances firms will operate at the minimum point on their long-run average total
cost curves.
C. both industries entail the production of differentiated products.
D. barriers to entry are either weak or nonexistent.
Answer: D
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The price elasticity of demand for gasoline is estimated to be -0.2. Two million gallons are sold daily at a price of $1. Use this information to calculate a demand curve for gasoline assuming it is linear
What will be an ideal response?
Tax cuts shift aggregate demand
a. right as do increases in government spending. b. right while increases in government spending shift aggregate demand left. c. left as do increases in government spending. d. left while increases in government spending shift aggregate demand right.
Which of the following is a transaction cost?
What will be an ideal response?
When marginal cost is greater than marginal benefit at the current activity level, the decision maker can increase net benefit by decreasing the activity because
A. net benefit is upward sloping at this point. B. total cost will fall by more than total benefit will fall. C. marginal cost is rising faster than marginal benefit is falling. D. total benefit will rise by more than total cost will rise.