One Prediction About Monopolistic Competition Is That It Has Higher

question 25

Multiple Choice

One prediction about monopolistic competition is that it has higher unit costs than perfect competition.But it is unreasonable to conclude that monopolistic competition is therefore bad for consumers because

• A)consumers benefit from products becoming more homogeneous.
• B)consumers benefit because of an increase in quantity available.
• C)higher production costs means more employment.
• D)consumers benefit from lower prices.
• E)consumers benefit from an increased variety of products.

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Definitions:

Common-Size Financial Statement

A financial statement that expresses each line item as a percentage of a base figure, facilitating comparative analysis.

Vertical Analysis

Vertical analysis is a financial statement analysis method where each entry for each of the three categories of accounts (assets, liabilities, and equity) in a balance sheet is represented as a proportion of the total account.

Acid-Test Ratio

A stringent measure of liquidity that assesses a company's ability to meet its short-term obligations without relying on the sale of inventories.

Acid-Test Ratio

A stringent indicator that determines whether a firm has enough short-term assets to cover its immediate liabilities without selling inventory.