A Monopolistically Competitive Industry Combines Elements of Both Competition and Monopoly

question 157

Multiple Choice

A monopolistically competitive industry combines elements of both competition and monopoly. It is correct to say that the competitive element results from

• A)a relatively large number of firms, and the monopolistic element from product differentiation.
• B)product differentiation, and the monopolistic element from high entry barriers.
• C)a perfectly elastic demand curve, and the monopolistic element from low entry barriers.
• D)a highly inelastic demand curve, and the monopolistic element from advertising and product promotion.

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