A Major Difference Between Monopoly and Monopolistic Competition Is

question 102

Multiple Choice

A major difference between monopoly and monopolistic competition is

• A)One maximizes profits by setting MR equal to MC,and the other does not.
• B)The number of firms in the market.
• C)One type of firm has market power,and the other does not.
• D)One has a downward-sloping demand curve,and the other does not.

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Definitions:

Average Total Cost Curves

A graphical representation showing the average cost per unit of output at different levels of production.

Monopolistic Competitor

A firm operating in a market with many competitors but differentiating its product or services from others, thus having some degree of market power.

Price Discrimination

A strategy where a company sells the same product at different prices to different customers, not based on costs but typically on willingness or ability to pay.

Monopolistically Competitive Industry

An industry characterized by many firms offering products that are similar but not perfect substitutes, leading to competitive markets where companies compete on product differentiation, prices, and marketing.