In Both Monopolistic Competition and Perfect Competition

question 218

Multiple Choice

In both monopolistic competition and perfect competition,

• A) firms sell identical products.
• B) there is easy entry and exit.
• C) firms are price takers.
• D) firms face horizontal demand curves.
• E) the marginal revenue curve and the demand curve are the same.

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Definitions:

Actual Price Level

The current general price of goods and services in an economy at a particular time.

Inflation Rate

A measure of the rate at which the overall level of prices for goods and services is rising, indicating a decrease in the purchasing power of a country's currency.

Short Run

A period in economics during which at least one factor of production is considered fixed, focusing on immediate effects of changes in demand or supply.

Expansionary Gap

The amount by which actual output in the short run exceeds the economy’s potential output