Which of the following is not a characteristic of a monopolistically competitive market ?
Correct answer: B. long run economic profits
- A. free entry and exit
- B. long run economic profits
- C. many sellers
- D. differentiated products
Explanation
Monopolistic competition has many sellers, differentiated products, and relatively free entry and exit, but entry eventually eliminates economic profit in the long run. Therefore, persistent long-run economic profits are not a characteristic.
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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.
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