What characteristic of monopolistic competition may help to offset the inefficiency of this market structure?
A) Free entry and exit imply that firms produce at minimum long-run average cost.
B) Consumers may value the product diversity that allows them to choose from a wide variety of differentiated products.
C) Consumers may feel better about the inefficiency if they know that firms earn zero profits.
D) Consumers may prefer this outcome to monopoly or monopsony.
B
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A) smaller; volatile B) larger; volatile C) larger; stable D) smaller; stable
If there is a ceiling price below the equilibrium level, a decrease in demand will worsen the shortage
a. True b. False Indicate whether the statement is true or false
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a. True b. False Indicate whether the statement is true or false
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