Monopolistic competition is similar to
a. perfect competition because the firms face downward-sloping demand curves and can earn only a normal profit in the long run
b. pure monopoly because the firms face downward-sloping demand curves and can earn only a normal profit in the long run
c. perfect competition because the firms face downward-sloping demand curves and similar to pure monopoly in that the firms can earn only a normal profit in the long run
d. pure monopoly because the firms face downward-sloping demand curves and similar to perfect competition in that the firms can earn only a normal profit in the long run
e. pure monopoly because the firms face downward-sloping demand curves and can earn an economic profit in the long run
D
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When the current price is above the market-clearing level we would expect:
A) quantity demanded to exceed quantity supplied. B) quantity supplied to exceed quantity demanded. C) a shortage. D) greater production to occur during the next period.
A consequence of a publicly owned natural monopoly is:
A. the loss of the profit motive. B. an increase in the motivation to improve efficiency. C. increased public pressure to reduce costs. D. reduced chance to remain open longer than political terms of office.
A profit-maximizing monopolist chooses the output level where MR = MC and chooses the corresponding price from the marginal revenue curve.
a. true b. false
Households receive bonds when they
A. purchase a share of ownership in firms. B. sell shares of a firm's stock. C. borrow money from financial institutions. D. lend money directly to firms.