A Significant Difference Between Perfect Competition and Monopolistic Competition Is

question 136

Multiple Choice

A significant difference between perfect competition and monopolistic competition is that

• A)a perfectly competitive firm is a price searcher, while a monopolistic competitive firm is a price taker.
• B)a perfectly competitive firm faces a downward-sloping demand curve, while a monopolistic competitive firm faces a perfectly elastic demand curve.
• C)a perfectly competitive firm sells a homogeneous product, while a monopolistic competitive firm sells a differentiated product.
• D)a perfectly competitive firm sets price above marginal cost, while a monopolistic competitive firm sets price equal to marginal cost.

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Definitions:

Equity

The amount of funds contributed by owners (shareholders) plus the retained earnings (or losses), representing ownership interest in a firm.

Capital Balances

The amount of money that the partners or owners of a business have contributed or acquired through retained earnings.

Partnership Liabilities

The debts and obligations for which a partnership is legally responsible, typically shared among the partners according to their agreement.

Creditors

Individuals or organizations to whom a company or person owes money for services or goods provided.