The Number of Firms in a Monopolistically Competitive Market Means

question 297

Multiple Choice

The number of firms in a monopolistically competitive market means that

• A) all firms will have substantial monopoly power since there are so few firms in the industry.
• B) each firm has a relatively small share of the total market since there are many firms in the industry.
• C) the firms will be likely to collude since there are only a few firms in the industry.
• D) firms will have a hard time earning non-negative profits since there are many firms in the industry.

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Definitions:

Profit-Maximizing Monopolist

A monopoly firm that aims to achieve the highest possible profit by adjusting the price and output of its product or service.

Total Cost Schedules

A detailed list showing the total cost associated with various levels of output production.

Entry Barriers

Obstacles that prevent new competitors from easily entering an industry or area of business.

Economic Profit

The difference between the entirety of earnings and the aggregate of expenditures, acknowledging both visible and concealed costs.