The use of the word "monopoly" in the name of the market structure called "monopolistic competition" refers to the fact that ?
Correct answer: B. a monopolistically competitive firms faces a downward-sloping demand curve for its differentiated product and so does a monopolist
- A. monopolistically competitive firms charge prices equal to their marginal costs just like monopolists
- B. a monopolistically competitive firms faces a downward-sloping demand curve for its differentiated product and so does a monopolist
- C. monopolistically competitive markets have free entry and exit just like a monopolistic market
- D. monopolistically competitive firms produce beyond their efficient scale and so do monopolists
Explanation
The monopoly element is that each firm has some market power over its differentiated product and therefore faces a downward-sloping demand curve. Free entry and exit, by contrast, are features of monopolistic competition rather than monopoly.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? [email protected]
About Microeconomics
Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
Practise Microeconomics
1,742 free Microeconomics MCQs from Economics, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Discussion
Stuck on an option, or know a faster way to get there? Ask or explain it here.
No comments yet. Be the first to explain this one.
Exams that ask Economics questions like this
Economics is on 3 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Microeconomics questions
Defenders of the use of brand names argue that brand names ?
Which of the following is not an argument put forth by economists in support of the use of advertising ?
Which of the following products is least likely to be sold in a monopolistically competitive market ?
When firms enter a monopolistically competitive market and the business-stealing externality is larger than the product-variety externality then ?
Which of the following is true with regard to monopolistically competitive firms scale of production and pricing decisions Monopolistically competitive firms produce ?
Which of the following is true regarding the production and pricing decisions of monopolistically competitive firms? Monopolistically competitive firms choose the quantity at which marginal cost equals ?