Which of the Following Is a Distinction Between Perfectly Competitive

question 10

Multiple Choice

Which of the following is a distinction between perfectly competitive and monopolistic competition?

• A) Perfectly competitive firms must compete with rival sellers; monopolistically competitive firms do not confront rival sellers.
• B) Monopolistically competitive firms can raise their price without losing sales; perfectly competitive firms must lower their price in order to sell more of their product.
• C) Perfectly competitive firms confront a perfectly elastic demand curve; monopolistically competitive firms face a downward-sloping demand curve.
• D) Perfectly competitive firms may make either economic profits or losses in the short run, but monopolistically competitive firms always earn an economic profit.

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Definitions:

Full Employment

A situation in an economy where all available labor resources are being used in the most efficient way possible, typically reflected by the absence of cyclical unemployment.

Equilibrium

Equilibrium is a state in which all forces or influences are balanced, in economic terms, it refers to the point where supply equals demand, resulting in market stability.

Spending Multiplier

The ratio of the change in total output induced by an autonomous change in aggregate spending to the size of that autonomous change.

Output Changes

This term refers to variations in the level of production or output in an economy over a specific period.