The Demand Curve Facing a Monopolistic Competitor Will Be More

question 171

Multiple Choice

The demand curve facing a monopolistic competitor will be more elastic than the demand curve facing a monopolist because

• A)there are barriers to exit for the monopolist, but not for the monopolistic competitor.
• B)the monopolistic competitor attains resource-allocative efficiency, but the monopolist does not.
• C)there are substitute goods for what the monopolistic competitor produces, but not for what the monopolist produces.
• D)the monopolist is a price searcher, but the monopolistic competitor is not.

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Definitions:

Fixed Overhead

Costs that do not change with the level of production or sales, such as rent, salaries, and insurance.

Released Facilities

Properties, equipment, or facilities that are no longer under contract or reserved, and are available for use or lease.

Full Capacity

The maximum level of output that a company can sustain within a given period under normal operating conditions.

Special Order

An order that deviates from the regular product offerings of a business, often requiring unique pricing and terms.