Economists Have Long Debated Whether There Is a Significant Loss

question 259

Multiple Choice

Economists have long debated whether there is a significant loss of well-being to society in markets that are monopolistically competitive rather than perfectly competitive.Which of the following offers the best reason why some economists believe that monopolistically competitive markets benefit consumers despite any loss of well-being?

• A)Although consumers may pay a price greater than marginal cost for a product, the product is produced at the minimum average total cost.
• B)Although consumers may pay a price greater than marginal cost and the product is not produced at minimum average total cost, they benefit from being able to buy a differentiated product more closely suited to their tastes.
• C)Consumers pay a price equal to the marginal cost of producing a product, even though it is not produced at the minimum average total cost.
• D)Consumers are better off choosing from a variety of differentiated products, even though product differentiation causes barriers that restrict entry into monopolistically competitive markets.

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Definitions:

Tandem Master Cylinder

A brake system component with two chambers used for creating hydraulic pressure, enhancing safety through redundancy.

Primary Piston

The main piston in a system, especially in automotive braking systems, that enacts the initial force for pressure application.

Actuated Hydraulically

Operated or moved by the pressure of a fluid within a hydraulic system.

Double-acting Wheel Cylinder

A hydraulic cylinder in a drum brake system that can apply force in both directions, allowing for more effective brake application.