If the Number of Firms in a Monopolistically Competitive Industry

question 6

Multiple Choice

If the number of firms in a monopolistically competitive industry increases and the degree of product differentiation diminishes,

• A) the likelihood of realizing economic profits in the long run would be enhanced.
• B) individual firms would now be operating at outputs where their average total costs would be higher.
• C) the industry would more closely approximate pure competition.
• D) the likelihood of collusive pricing would increase.

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Definitions:

Axle Spindle

A component of the wheel assembly that provides a mounting point for the wheel and its bearing, allowing the wheel to rotate freely around the axle.

Brake Drum

A component of a drum brake system, where brake shoes press against the interior to create friction and slow down the vehicle.

Kinetic Energy

The energy of motion.

Mechanical Action

The physical movement or force applied by machinery or mechanical components to perform a function.