The Markets for Products X and Y Both Have Many

question 37

Multiple Choice

The markets for Products X and Y both have many sellers, each earning an economic profit of zero in the long run. One of the markets is perfectly competitive while the other is monopolistically competitive. Which of the following information can help you determine which operates in a monopolistically competitive market structure?

• A) There is easy entry into the market for Product X.
• B) The firms selling product Y choose the profit-maximizing quantity where MR = MC.
• C) The price for Product X is higher than the marginal cost at the profit-maximizing quantity.
• D) The price for Product Y is equal to the average total cost at the long-run equilibrium quantity.

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Definitions:

Futures Contract

A formal contract that obligates a purchase or sale of an item at an agreed price on a future date.

Settle Price

The settle price is the final price at which a futures contract is settled upon expiration or closing.

Futures Contracts

Standardized legal agreements to buy or sell a specific commodity or financial instrument at a predetermined price at a specified time in the future.

Gold

Gold is a precious metal that has been used historically as a medium of exchange and is widely held as a form of investment or hedge against economic uncertainty.