Which of the Following Statements Is True

question 106

Multiple Choice

Which of the following statements is true?

• A)Monopolistic competitive firms do not experience the law of diminishing marginal returns when they produce output.
• B)Monopolistic competitive firms face a downward-sloping demand curve and a horizontal marginal cost curve.
• C)There are many buyers and few sellers in the theory of monopolistic competition.
• D)Monopolistic competitors are said to underutilize their present plant size.

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Definitions:

Consumer

A person or collective that buys products or services for their own consumption and not for making or selling them.

Income

The revenue brought in, consistently over time, from professional endeavors or investments.

Budget Constraint

The limits imposed on household choices by income, prices, and taxes, defining the combination of goods and services they can afford.

Income

Proceeds obtained, often periodically, from labor or investment returns.