The Demand Curve Facing a Monopolistic Competitor Will Be More

question 171

Multiple Choice

The demand curve facing a monopolistic competitor will be more elastic than the demand curve facing a monopolist because

• A)there are barriers to exit for the monopolist, but not for the monopolistic competitor.
• B)the monopolistic competitor attains resource-allocative efficiency, but the monopolist does not.
• C)there are substitute goods for what the monopolistic competitor produces, but not for what the monopolist produces.
• D)the monopolist is a price searcher, but the monopolistic competitor is not.

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Definitions:

Surplus

The situation in which the quantity of a good or service supplied is more than the quantity demanded.

Import Quotas

Restrictions set by a government on the quantity of goods that can be imported into a country.

Net Exports

The value of a country's total exports minus its total imports, representing the net effect of foreign trade on an economy.

Capital Flight

A large and sudden reduction in the demand for assets located in a country