If Firms in an Industry Differentiated Their Products and Made

question 243

Multiple Choice

If firms in an industry differentiated their products and made economic profits in the short-run, what other characteristic would be important to determine if this is an oligopoly or a monopolistically competitive market?

• A) the number of firms in the market
• B) the number of close substitutes for the good being produced
• C) the number of buyers in the market
• D) if the good being sold is a normal or inferior good

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Definitions:

MRS

The Marginal Rate of Substitution is the rate at which a consumer is willing to exchange units of one good for units of another good while maintaining the same level of utility.

Marginal Utility

Marginal utility is the additional satisfaction or utility that a consumer receives from consuming one more unit of a good or service.

Utility Maximization

A theory in economics that suggests consumers will allocate their resources to maximize their utility or satisfaction given their income and the prices of goods and services.

Consumption Good

A good that is utilized by consumers to satisfy their current wants or needs.