In Monopoly and Monopolistic Competition, Price Is Greater Than Marginal

question 164

Multiple Choice

In monopoly and monopolistic competition, price is greater than marginal cost. This is an indication that

• A)both industries result in product variety.
• B)both industries make economic profits in the long run.
• C)there are barriers to entry in both types of industries.
• D)marginal costs must be very low in both types of industries.
• E)both industries result in deadweight loss.

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Definitions:

Bad Debt Expense

The operating expense incurred because of the failure to collect receivables.

Uncollectible

Refers to amounts due to a company that it considers unlikely to be collected from debtors.

Trade Receivables

Sums due to a business from its clients that stem from selling products or services on account.

Exchange Notes

Financial instruments representing an agreement between parties to exchange interest payments or currency values over a set period.