The Difference Between a Perfectly Competitive Firm and a Monopolistically

question 92

Multiple Choice

The difference between a perfectly competitive firm and a monopolistically competitive firm is that a monopolistically competitive firm faces a:

• A) horizontal demand curve and price equals marginal cost in equilibrium.
• B) horizontal demand curve and price exceeds marginal cost in equilibrium.
• C) downward-sloping demand curve and price equals marginal cost in equilibrium.
• D) downward-sloping demand curve and price exceeds marginal cost in equilibrium.

---

Definitions:

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term and long-term obligations, calculated as current assets divided by current liabilities.

Acid-test Ratio

A financial metric that measures a company's ability to pay off its current liabilities with its most liquid assets without relying on the sale of inventory.

Debt-to-Equity Ratio

A ratio used to measure the balance between the amount of debt and equity financing a company's assets.

Times Interest Earned

A financial ratio that measures a company's ability to meet its debt obligations based on its current income.