A Characteristic of Monopolistic Competition Is That Each Firm

question 191

Multiple Choice

A characteristic of monopolistic competition is that each firm

• A) faces perfectly elastic demand.
• B) faces a downward-sloping demand curve.
• C) has a perfectly elastic supply.
• D) has a perfectly inelastic supply.

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Definitions:

Pure Monopoly

A market structure where a single seller controls the entire market for a product or service, with no close substitutes available.

Close Substitutes

Products or services that can easily replace each other in the eyes of the consumer, resulting in a high degree of interchangeability and competition.

Single Firm

A business or company that operates alone in its industry without competitors.

Purely Monopolistic

Characterizes a market scenario where one entity exclusively controls the entire market for a product or service, eliminating all direct competition.