The Demand Curve Facing a Monopolistically Competitive Firm Is Quite

question 14

Multiple Choice

The demand curve facing a monopolistically competitive firm is quite elastic because

• A) there are many close substitutes to the good the firm is producing.
• B) the industry is producing a homogeneous product.
• C) of the possibility of entry of new firms.
• D) goods that are complements to the good the firm is producing also have elastic demand curves.
• E) firms are not behaving strategically.

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Definitions:

Earnings Decrease

A reduction in the income a company generates from its activities, excluding extraordinary and non-recurring items.

Risk

The potential for experiencing losses or less-than-expected returns, inherent in investments and business activities.

Common-sized Financial Statements

Financial statements that present all items in percentage terms. The balance sheet items are presented as a percentage of assets, and income statement items are presented as a percentage of sales.

Industry Averages

Statistical benchmarks that represent the standard or average performance in a particular industry, useful for comparison and analysis.