Monopolistic Competition Is an Inefficient Market Structure Because

question 487

Multiple Choice

Monopolistic competition is an inefficient market structure because

• A)marginal revenue equals marginal cost.
• B)it has a deadweight loss, just as monopoly does.
• C)long-run profits are zero due to free entry.
• D)All of the above are correct.

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Definitions:

Straight-Line Method

A method of calculating the depreciation of an asset that allocates an equal amount of depreciation each year over the asset's useful life.

Book Value

The value of an asset as it appears on a company's balance sheet, calculated as the cost of the asset minus accumulated depreciation or impairment.

Consolidated Financial Statements

Financial statements that show the aggregate of a parent company and its subsidiaries, presenting the financial results and position as if the group were a single entity.

Cost Method

An accounting approach for investments, where the investment is recorded at cost and adjusted only for dividends received, impairments, and certain other limited circumstances.