Which of the Following Supports the Contention That Monopolistic Competitors

question 301

Multiple Choice

Which of the following supports the contention that monopolistic competitors have a strong incentive to engage in R&D?

• A)Entry to monopolistic competitive industries is relatively easy, and thus profit from innovation is quickly competed away.
• B)Most monopolistic competitive industries are decreasing-cost industries.
• C)The desire to differentiate products from competitors may motivate monopolistic competitors to engage in R&D.
• D)Monopolistic competitors have large retained earnings that are available to finance R&D.

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Definitions:

Governmental Resources

Assets, finances, and other resources controlled or owned by the government for public use and administration.

Allocative Efficiency

A state in which resources are allocated in a way that maximizes the net benefit to society or achieves the desired distribution among competing uses.

Productive Efficiency

Productive efficiency occurs when an economy or entity produces goods and services at the lowest possible cost, utilizing all available resources without waste.

MB = MC

The principle that optimal decision-making is achieved when the marginal benefit equals the marginal cost.