A Monopolistically Competitive Firm and a Monopoly Are Similar Because

question 49

Multiple Choice

A monopolistically competitive firm and a monopoly are similar because

• A)both firms will earn zero profits in the long run.
• B)both firms always operate at their point of minimum average cost.
• C)they each face a downward-sloping demand curve.
• D)both firms must behave strategically toward other firms in the industry.
• E)each firm has a large number of competitors.

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Definitions:

Treasury Bankrupt

A situation where the government's treasury exhausts its funds, unable to meet its financial obligations.

Interest Payments

Payments made to lenders as a return on borrowed capital, typically expressed as a percentage of the principal.

Deficits

Occurs when an entity, typically a government, spends more money than it receives in revenue over a specific period, resulting in a shortfall that needs to be financed.

Inflationary Gap

The difference between the actual level of output in an economy and the output level needed to achieve full employment without inflation.