Which One of the Following Statements Is TRUE for BOTH

question 115

Multiple Choice

Which one of the following statements is TRUE for BOTH perfect competition and monopolistic competition?

• A) Each type of firm faces a downward sloping demand curve.
• B) Each type of firm produces a homogeneous product.
• C) In the long run, firms in both industries make zero economic profit.
• D) Each type of firm competes on product quality and price.

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Definitions:

Structuralist View

An economic perspective that emphasizes the role of structural factors, such as institutional, social, and technological aspects, in determining economic outcomes.

Allocative Inefficiency

A situation in which resources are not allocated in a way that maximizes total welfare or societal well-being.

Illegal Business Behaviors

Illegal business behaviors encompass actions by companies that violate laws or regulations, such as fraud, insider trading, and environmental violations.

Natural Monopoly

A market condition where a single firm can supply the entire market's demand for a good or service more efficiently than multiple competing firms due to high fixed or startup costs associated with the industry.