All of the following are assumptions of monopolistic competition EXCEPT
A) many buyers and sellers.
B) homogeneous product.
C) easy entry of new firms in the long run.
D) profit-maximizing behavior.
Answer: B
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The above figure shows supply and demand curves for apartment units in a large city. If the city government passes a law that establishes $350 per month as the legal maximum rent, producer surplus decreases by
A) d. B) b + f. C) c + g. D) i.
Which of the following is an assumption made about a competitive labor market?
a. A firm must offer a higher wage rate to attract more labor. b. A firm must offer a lower wage rate to attract more labor. c. A firm cannot influence the market wage rate. d. The labor supply curve facing each firm is inelastic. e. Workers compete for jobs and firms pay a variety of wage rates.
In a perfectly competitive? industry, the industry demand curve
A. must be vertical. B. is? upward-sloping. C. is? downward-sloping. D. must be horizontal.
Which of the following is a government response to asymmetric information?
A) product guarantees B) external product certification C) manufacturer's warranties D) government licensing