Under the Conditions of Monopolistic Competition

question 305

Multiple Choice

Under the conditions of monopolistic competition

• A) firm profits are higher in the long run than in the short run.
• B) average costs of production are the same in the short run as they are in the long run.
• C) economic profit is zero in the long run.
• D) price equals marginal cost.

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Definitions:

Inventory Cycle Theory

A theory explaining the fluctuations in inventory levels and production rates within firms, based on changes in sales forecasts and supply chain efficiencies.

Recession Of 2001

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Consumer Spending

The total amount of money spent by households in an economy on goods and services over a time period.

Investment Spending

Expenditures on physical assets like property, industrial buildings, or equipment, which are intended to create future benefits such as increased production capacity or efficiency.