In Monopolistically Competitive Industries

question 80

Multiple Choice

In monopolistically competitive industries,

• A)firms compete on quality,price and marketing.
• B)the range of choice of products is the same as in perfectly competitive industries.
• C)firms are insensitive to changes in consumer demand.
• D)all firms produce a quantity at which marginal cost is greater than marginal benefit.
• E)all firms make an economic profit.

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Definitions:

Comparative Advantage

The ability of a party to produce a particular good or service at a lower marginal and opportunity cost over another.

Specialize

The process of focusing effort and resources on a particular area of expertise or production to increase efficiency and output.

Production Possibility Frontiers

A curve depicting all maximum output possibilities for two goods, given a set of inputs and technology, illustrating the trade-offs and opportunity costs.

Opportunity Cost

Abandoning potential gains available from alternative choices when one is picked.